Ladies and gentlemen,
Jim, Peter,
Dear friends,

I am glad to be with you tonight and it is an honour for me to receive the “Globalist Award” from the Canadian International Council. I know that for years your prestigious institution has been promoting research and dialogue on international affairs issues through a network that crosses academic disciplines, policy areas and economic sectors.

When I first received your letter inviting me to come to Toronto to receive this award, I was curious and checked in the dictionary to find out what “globalist” really means. It was not there. I was not really surprised ... I had heard about Jim Bassilie and his team!! I figured out that it was probably another of those Canadian inventions! I will come back to this later on, but in my view innovation, creativity — intellectually, commercially, and trade wise — is one of THE essential elements that can help us tackle today’s crises.

The theme of your annual event this year focuses on the economic crisis, with particular emphasis on its worrying implications for the stability of an open international trading system, which I understand you believe is vital if not essential for a sustained economic recovery. I could not agree more with you that the series of crises we have faced in recent months, crisis on food prices, crisis on oil prices and the financial crisis, are global crises for which we need global ideas for global solutions.

We are now confronted with the first global crisis in the history of mankind. A crisis which threatens to undo the economic development achieved by many countries and to erode people’s faith in an open international trading system.

International trade is sometimes blamed for the crisis. Some argue that trade openness has made economies more vulnerable. I would argue that trade is not the cause of this global crisis, it is one of its victims.

We know that countries gain from trade as a result of the increased economic efficiency brought about by specializing in goods in which they have a comparative advantage. Economically speaking, few would doubt that the multilateral trading system has been a resounding success. Global trade has grown 30 fold in real terms since 1948. The growth in services exports has been equally impressive, expanding from around $40 billion in 1980 to $460 billion last year.

This is still true today. Market opening and reducing trade barriers has been, is and will remain essential to promote growth and development, to improve standards of living and to tackle poverty reduction.

But it is also true that opening markets may indeed expose countries to greater volatility. The response is not to turn away from openness. It is to ensure that market opening is accompanied by fairer international rules and by domestic policies that provide a safety net for workers against the sometimes painful impact of competition, that protect them against the now well known volatility of market capitalism and that favour innovation and adaptation to change. In sum, we cannot underestimate the importance of domestic policies that must accompany trade opening and I think Canada is a good example of that.

The policy challenges facing the world’s leaders today are as great as they have been at any time since the Second World War. As policymakers ponder the way forward, they would be well served to let history be their guide. History tells us it was the political mistakes — or inaction — of the 1930s that transformed a financial crisis into a full blown economic catastrophe. Banks were allowed to fail. Panic was allowed to grow. When assessing the disastrous consequences which flowed from these policy mistakes, politicians predictably shifted the blame to foreigners. It’s always an easy route because foreigners can’t seek revenge at the polling booth.

Indeed, if accompanied by the right domestic policies, trade can be a powerful tool for fostering growth and contributing to economic development. Trade flows are a function of three phenomena: economic activity, technological innovation and the removal of trade barriers. These are areas where domestic policies are so important.

Creativity and innovation are often key to the success of a business, particularly when strategizing during planning, and when designing new products and services. Jim understood this reality when he conceived his famous picture in motion or the blackberry.

Peter Munk will also confirm, I am sure, the importance of domestic policies that allowed him to build several enterprises that have achieved outstanding performances.

This is what the world needs: domestic policies that ensure that the business community can benefit from market openings while promoting innovative approaches to address the inextricable dimensions of the current crisis.

This is also where I see the crucial role of think-tanks like the Canadian International Council. If I look at the CIC research programme, I am impressed by the breadth of policy issues you are considering, some of which we discussed when we met earlier today. The goal of your research programme aims at outlining the best possible recommendations to help build Canada’s strategic foreign policy position on those issues. We need to develop new thinking to ensure that the multilateral trading system which I believe is an international public good continues to best serve everyone. We need creativity also to ensure that we don’t repeat mistakes from our past.

Like the CIC, I have been concerned about a surge in protectionism. I have now in my office a picture of two men smiling as they shake hands. Visitors often ask whether they are my relatives, my uncles or perhaps my grandparents. In fact these two gentlemen are Senator Smoot and Representative Hawley, the authors of the famous 1930 Smoot and Hawley Tariff Act and in my view the true founders of the World Trade Organization! This picture is a reminder about rises in beggar-thy-neighbour trade responses which can quickly spiral out of control, as we saw in the 1930s.

My point is that, like you, I believe that retreating from market opening is not a solution to the economic crisis. History proves that for countries that depend on trade and have specialized according to comparative advantage, a reversal of openness will impose significant costs on the economy. What is more, setting up new barriers to trade will be seen as protectionism and will risk retaliation from trade partners. One country’s exports are another country’s imports. Rather than reviving economies, isolationist moves would worsen the global crisis. At a time when the global economy is so fragile worldwide and in the face of the unprecedented decline in trade flows, we must send a clear and credible message that protectionism is not the answer.

I may not sound very innovative but I believe that one of the important components of the solution to the ongoing global crisis is to restore confidence and to reinforce the stability and predictability of the global trading system.

Concluding the WTO Doha Round, which in my view is doable, will do just that. The Doha Round is simply the lowest hanging global stimulus package. A successful Doha Round would show that even in the midst of a global economic crisis, nations can successfully cooperate to reach global solutions. We will have a test of this collective will on climate change in a few weeks in Copenhagen.

I want to thank you again for this Globalist Award. But I am even more grateful to Jim, Peter and the CIC for their continuous efforts in promoting the values of the multilateral trading system and of the WTO and its Doha Development Round.

Thank you