"Stop the world
I want to get off" not an option
by Robert T.E. Gillespie
Ottawa,
21 November 1997-
As Vancouver plays host to the APEC meeting, opponents are hard at work generating
"globaphobia", the fear that free trade in a global economy destroys
jobs and widens wage differentials to the benefit of a privileged few. Put up
the barriers they say, let's insulate ourselves from turbulence outside and
avoid ever encroaching competition from foreigners.
Globalization is occurring and will continue to occur in all facets of our lives.
Against that fundamental fact, the only realistic course is to come to terms
with it and in the process turn it to our advantage.
Nobody pretends that the days of protected economies, insulated from the world
by tariff and non-tariff barriers, can or should be brought back. Today's working
realities are not about secure jobs for life. They demand willingness to adapt,
learn, and retrain - and that should be viewed as a positive challenge.
Make no mistake. Globalization is good for Canada. As the global economy becomes
more closely integrated, there will be increased cross-border trade, marketing,
investment, services and manufacturing. How could it be otherwise for an economy
in which exports represent a 40% share of GDP, a bigger proportion than in any
other industrialized nation. In the past decade, Canada has opened its markets
and adjusted to accelerating change in the global economy, with the result that
exports have more than doubled since 1992 alone.
This exceptional growth has produced a record surplus in merchandise trade of
$34.5 billion
. Exports have been the driving force behind Canada's economic
growth and job creation in the 1990s, a performance strongly linked to business
investment. What's more, almost half of the output of Canada's private sector
is exported, with high value-added sectors doing particularly well. On the investment
front, Canadian investment abroad is now almost at par with the considerable
levels of foreign direct investment entering Canada.
Consider other positive realities of globalization. Billions of consumers in
Asia, Latin America and eastern Europe have gained their first access to the
global marketplace. China, India and Indonesia together already have 100 million
people with an income equivalent to the average income in Spain today. If economic
growth averaged 6%, some 700 million people in those countries will have reached
that level of income and purchasing power by 2010.
To fear the unfamiliar is a natural human reaction, but to attempt to turn back
the clock and ignore the opportunities of globalization would, as surely as
night follows day, spell economic decline for Canada or for any other major
trading nation.
This is worth remembering as the curtain goes up on an APEC meeting which could
provide positive outcomes for Canadian business in two distinct areas: financial
services liberalization; and promoting the prospects of Canadian small and medium-sized
enterprises in the Asia-Pacific arena.
Financial services are bound to feature strongly in the debate in Vancouver
given the financial turbulence of the past couple of months. While nobody should
argue against ongoing efforts to develop an early-warning mechanism or broad
stabilization measures to head off similar disruptions in the future, a wrong
and counterproductive response to the recent upheaval would be to put the brakes
on financial services liberalization.
On the contrary, the Canadian Council for International Business, Canadian affiliate
of the International Chamber of Commerce, believes that one of the most positive
outcomes would be for the APEC Leaders as a group to provide an impetus to the
negotiations at the World Trade Organization on financial services liberalization,
which are scheduled to conclude December 12, 1997. It would not be the first
time that APEC, a relative newcomer to the world stage, has taken a lead. A
year ago, an APEC agreement on trade in information technology was the forerunner
to the Information Technology Agreement (ITA), an historic breakthrough to foster
trade in this key sector.
Financial services liberalization could be a stabilizing factor internationally.
Experience shows that open and transparent financial markets - free of exchange
controls, restrictions on transfers of funds and discriminatory measures against
foreigners - are the most competitive, efficient and responsive way to meet
the needs of business and domestic consumers. The presence of foreign participants
encourages local financial service providers to improve their performance, and
introduces the healthy checks and balances of competition. Local enterprises
benefit from greater access to increased inflows of capital and expertise.
A second important area that affects the business grassroots of every national
economy is how to make life easier for the small and medium-sized enterprises,
which number a staggering 40 million throughout the APEC economies. Maybe the
most important requirement is to cut red tape, the bane of any small entrepreneur
trying to find time to make his or her business succeed. Other requirements
are improved access for small business financing, establishment of business
networks and alliances, and the facilitation of temporary business entry. Even
in the digital age, business success depends on getting out there on the ground
to talk to the customer. So let's encourage our governments to make these things
easier to the mutual benefit of businesses throughout the APEC region.
Small and medium-sized entrepreneurs hold the keys to a flourishing economy
because there are so many of them, and their number is growing rapidly. In APEC,
they account for almost 90% of all enterprises, contribute as much as 60% of
economic output, and stimulate 35% of exports. Government leaders can go far
in terms of improving their respective economies by facilitating and nurturing
the APEC phenomenon.
"Stop the world I want to get off" is not an option for Canada, APEC,
or any other member of the world community. Instead, let us find ways to enhance
the "win-win" opportunities being presented by a growing and dynamic
global economy.
Robert T.E. Gillespie is Chairman, Canadian Council for International Business
Chairman & CEO, General Electric Canada Inc.