New Policies for the Eighties

DR. STACKHOUSE:

Ladies and gentlemen: "Canada has always been particularly vulnerable to the impact of outside forces," George Ignatieff has written in Spec trum, published by the Canadian Imperial Bank of Commerce, January, 1981. But generally its own people are not aware of it. Perhaps because of our small population, Canadians have never shown more than passing interest in their country's practice of foreign policy. The subject is seldom debated even by the House of Commons, that chamber often being so absorbed with local issues that it seems like a glorified county council.

In spite of such discouragements, however, Canada and the House of Commons have been served by outstanding foreign ministers, their contributions to global affairs often exceeding the potential of their country's size among the world's powers.

To that succession now comes Canada's present Secretary of State for External Affairs, the Honourable Mark MacGuigan, who brings many qualifications to his prestigious but critical portfolio: an intellect honed by years of devotion to studying and teaching the law; a determination made firm by twelve years of parliamentary service; a philosophy illumined by moral and spiritual values. Born and reared in Prince Edward Island, Mark MacGuigan left that garden province as a youth seeking higher education in Toronto and New York. Later, equipped with two doctorates, he began his professional career as a professor of law in the University of Toronto, moving later to the Osgoode Hall Law School, and in 1967 becoming the University of Windsor's first Dean of Law.

During those academic years, however, he was not a recluse within an ivory tower. He ran twice for public office, and not allowing himself the luxury of discouragement, he offered himself a third time in the 1968 general election. Victorious on that try, he entered Parliament and has been re-elected an impressive four times.

From 1968 until 1980, his many talents were to find their expression in the duties of a private member, a committee chairman, or a parliamentary secretary. Whenever a cabinet shuffle would be mentioned, his name was always on the short list, but for twelve years he had to be content with knowing it is better to be out and have people wonder why you're not in than to be in and have them wonder why you're not out.

At last the light came even to the Prime Minister, and among the better appointments to the present government was that of Mark MacGuigan to the key ministry of External Affairs. In welcoming our distinguished guest, I can assure him the concern of this membership for the portfolio he carries is demonstrated by the fact The Empire Club of Canada has been addressed by every foreign minister Canada has had since the Department of External Affairs was founded.

We are honoured that our current External Affairs Secretary would come to us in his very first year of office, and it gives me great personal pleasure to welcome the Honourable Mark MacGuigan.

THE HONOURABLE MARK MACGUIGAN: Ladies and gentlemen: The capacity of nations to survive or prosper is conditioned in large part by two factors: their understanding of conditions and events in the world beyond their borders; and their flexibility in fashioning their institutions and policies to make survival possible in the world at large. Today, I want to discuss with you the significance of these principles for Canada in the eighties and to suggest a set of policies that might more effectively serve us in this period of radical change. I want, in particular, to deal with ways in which the public and private sectors of the Canadian economy might begin to think and proceed in a thrust to revitalize economic development at home and abroad.

The first prerequisite--understanding the dynamics of change and influence in the world of the eighties--takes us, of necessity, beyond the patterns that have prevailed since the end of the Second World War, to an analysis of things as they really are in this decade and at least through to the end of this century. As you know, for Canada those patterns of economic relationships have had a number of rather clear characteristics--our outward-directed perspective in developing trade relationships throughout the world, our diligence in developing export markets for the riches of our resource base, and, in more recent years, our use of multilateral instruments to try to ensure a stable economic environment essential to an economy that must rely on the international climate.

Our efforts have met with varying degrees of success if our affluence and growth over the years are reliable criteria. But the degree to which we can continue down that path in a quite different and less stable world is open to question. Our efforts exerted in co-operation with other nations and the international institutions generally have borne some fruit in shoring up the stability so necessary for an international trader like

Canada, even if we cannot claim one hundred per cent success.

But I believe that our national self-interest now calls for a re-appraisal of the conditions in which we have to do business and for a new look at the nature of the relationship between business and government in Canada in the years ahead. Put more bluntly, I believe there is a very different world out there than the one in which we have traditionally worked to advance our economic development in Canada. It is a world that is far less predictable, and one that calls for more stable and steady relationships if we are to survive.

It is no secret that the course of events in the seventies radically changed the rules of the game. The power shifts resulting from the realignment of energy prices, the impact of technology on traditional cultures and the generally more volatile nature of international relations have outrun the traditional patterns of economic and political power.

A decade ago, at the time of the Third Option, our objective was diversification of our international economic relationship. We saw diversification as a means of strengthening our relationship with the European Community and Japan. This is still a valid goal but the decade of the seventies taught us that the world is much wider than solely our obvious and traditional partners in the West.

Likewise, a decade ago we could not have foreseen or even imagined the transfer of wealth to oil-producing countries that has taken place. This gave new and strong economic power to not only the Middle East, but also to countries like Mexico, Venezuela, Nigeria and Indonesia. These states have emerged as new power centres of great interest to us, either because they can supply oil or because their oil wealth makes them much more interesting economic partners.

And so, for Canada--for both the private and public sectors--new realities have come over the horizon. In a number of fields, the eighties are likely to provide increased economic competition for us. Our manufacturing sector will be under pressure from this competition, particularly the traditional manufacturing industries. Lower labour costs in Third World countries and increasing automation in the manufacturing sector of our industrialized competitors will both offer severe challenges to Canadian manufacturing. The outlook is somewhat brighter for those areas where a Canadian specialty technology has been developed, or where manufacturing activity can be tied directly to the Canadian resource base.

You may ask why a Canadian foreign minister is attempting to peer into the future of Canadian industry. My answer is that I believe that an important dimension of Canada's foreign policy must vigorously address itself to establishing the stable and steady relationships to which I referred earlier.

Economic development in Canada is clearly a matter of priority attention for the federal government, as it is for the provincial governments. And there must be a viable consensus about what direction that development is to take, but I contend that this consensus must include our foreign relationships simply because the foreign trade and development dimension of the Canadian economy is becoming more fundamental than ever.

Important as they are, I believe we cannot continue to view this dimension solely in terms of the marketing of Canadian exports. Our economic development calculations must also take account of the various ways in which our foreign relationships can contribute to Canada's economic growth. We have to begin thinking of foreign countries as sources of investment, skilled labour, technology, energy and strategic natural resources. Foreign countries also provide opportunities for Canadian investors and entrepreneurs, and they thus become potential partners. Our relationships with them can take the form of project development, industrial expansion, licensing arrangements, etc. All of these things in varying degrees can be key inputs into Canada's economic development. It is logical, therefore, to begin seeking out those potential partnerships which can serve our interests best.

Where do governments fit in this picture? I think an important feature of the eighties is the growing preeminence of government-to-government relationships in international economic decision-making. For an increasing number of countries in the world, significant economic exchanges and co-operation are the bond for solid political relationships between the countries concerned. And the world of the eighties will undoubtedly see an increase in these state-to-state relationships. Canada is compelled to examine very carefully how we will respond to this phenomenon and to direct a good deal more attention to systematically developing the kind of political partnerships which our development requires.

All of these factors--the uncertain world of the eighties, the nature of decision-making in economic development, tougher competition for Canada abroad, the need for viable and strong political relationships--convince me that we must pursue more concentrated bilateralism. And I also believe that pursuit must be deliberate and concentrated, if we are to achieve our aim of developing a capability through which Canadian interests can be identified more systematically in these bilateral relationships. It is a course other countries have followed to their advantage. I can think of no reason why we cannot do likewise, particularly with the additional leverage which our resource strength can bring to bear.

The most obvious central bilateral relationship of benefit to Canada is with the United States. In many basic aspects, that relationship is central to our foreign policy considerations and vital to our development. But it is a relationship which we in Canada--both government and business--must manage coherently and productively, with a clear sense of our own economic and other priorities. It is true, no doubt, that some Canadian economic imperatives differ from those of the United States. But this need not deter us from assisting each other in achieving our national objectives.

Other relationships are, of course, vital to us. Our fastest growing markets for capital goods are in Latin America, in the Middle East and with partners not presently among our traditional relationships. I only recently returned from a series of meetings between a number of Canadian ministers and our counterparts in Mexico. There is general agreement that the potential for a durable political and economic relationship between our two countries is very bright.

I believe, however, that we must be very clear about the nature of these bilateral relationships and the qualities they should have. I think that if they are to be consistent and enduring we must be prepared to pursue them on a long-term basis. Our approaches have to be planned. And the execution of our foreign bilateral policy must be coherent. In this, all the relevant instruments of government should be called on to serve the relationship, including cultural exchanges and high-level visits. To the extent possible we shall have to avoid contradictions in our relationships. To achieve this, of course, our criteria for selecting key economic partners for Canada cannot be solely economic. We shall have to take account of a variety of political factors, such as the compatibility of values, cultural links and mutuality of interest in other spheres.

The federal government intends to discuss this bilateral approach to foreign policy with the provincial governments, and to develop it further in consultation with business and other leaders in Canada. But the main lines of the policy are clear: Canada is looking outward towards more significant partnerships in the world.

I believe that pursuing these relationships is consistent with our broader purposes in foreign policy. We will continue to look for multilateral conciliation and solutions of the world's problems. We must not permit the instability of the eighties to which I referred earlier to sound a retreat from this approach. But there is a huge potential in our developing strong bilateral relationships. We should be visible and active in places like Mexico City, Seoul, Singapore, Jakarta, Lagos, and Brasilia, to name just a few. There should be ministerial visits, and we should encourage and facilitate efforts of the private sector to find opportunities in these new centres of wealth and influence. Such a policy would also support our overall commitment to improving co-operation between the North and the South by intensifying concrete ties with some of the newly industrializing countries which are among our best potential partners. It would also support our efforts to increase our aid levels to the poorest countries.

In summary, new times call for new departures. Events which we could not have foreseen a decade ago are now upon us and our continued development requires a recognition that while interdependence among countries may be essential, our best course is to select the kinds of bilateral relationships that can prosper and endure and serve Canada's economic interests. This will call for a new and closer relationship in the aims and policies of both government and business. Government-to-government relations must be developed and nurtured in the interests of a wide variety of economic ventures which, ultimately, will ensure significant national benefits to Canada.

It is a challenging prospect, and one which calls for clear-sightedness in its implementation. But the benefits--political and economic--will pay dividends. It is, in the end, our best bet for survival in an otherwise difficult world.

The thanks of the club were expressed to Dr. MacGuigan by Marvin Gelber, Honorary Treasurer of The Empire Club of Canada.