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"Don't Get Comfortable: The Continuing Challenge of Change" - Remarks by Thomas J. Donohue

Tuesday, March 8, 2005 - 7:00pm

"Don't Get Comfortable: The Continuing Challenge of Change"

Remarks by Thomas J. Donohue
President & CEO, U.S. Chamber of Commerce


Ottawa, Canada
March 9, 2005


Thank you very much, Minister Pettigrew. I'm honored to be a part of the Canadian Chamber's CEO Speaker Series. The U.S. Chamber has a similar program that's very popular. It's a great opportunity for policymakers and the press to hear what's really going on in business, industry, and trade.

Later this afternoon, Prime Minister Martin and I will meet to share our hopes for advancing the U.S.-Canadian relationship.

Now, I'm not one for beating around the bush. I believe in plain speaking — and it's a testament to the strong ties of friendship between Canadians and Americans that we can speak plainly to each other.

The U.S.-Canada relationship has hit a few bumps in the road. We all know this. Pick up any newspaper north or south of our shared border and you can read all about it – cows, lumber, homeland security, missile defense, differing views on social and cultural values – with every perceived slight or insult breathlessly reported as a major breach.

I'd be happy to share my thoughts on any of these issues during the question period. But I will state here and now that while these bumps can't be ignored or dismissed, they will not stop the journey we are making together to forge a truly integrated North American economy that lifts all our citizens to new levels of opportunity and progress.

They will not stop this journey as long as the business communities of both nations demonstrate strong and principled leadership. I am here today on behalf of the U.S. Chamber of Commerce and the American business community to join with you in advancing that leadership.

The business community knows better than anyone about this success story.
Two-way trade in goods and services between Canada and the United States was worth nearly $450 billion last year – more than double what it was before the NAFTA. Over 80% of Canada's exports are shipped to the United States, and one-fifth of U.S. exports are shipped here.

That's as much as we export to the European Union, which has a population ten times the size of Canada!

But these economic statistics – as impressive as they are – don't tell the whole story of the U.S.-Canadian relationship. The foundation of our relationship is friendship, mutual respect, a common border, and a shared commitment to democracy and the rule of law.

Canada and the United States have a long and proud tradition of cooperation in defending our continent and fighting for freedom around the world. Whenever the need arises, we step up to the plate.

When tragedy struck the United States on September 11, 2001, Canada, in its words and actions, said "We will stand with you and fight against terror."

Canadian and U.S. forces defend freedom side by side in Afghanistan, just as they did in the two world wars, in the Korean War, in the Persian Gulf War, and in Kosovo.

At home, we continue to work together to enhance security on our own continent. Securing our borders without sacrificing the movement of goods and people that sustains our economic relationship is a tricky task. The U.S. Chamber has challenged our own government on this issue on those occasions when we believe it has proposed measures that won't work or will cost us more in freedom than the added safety they could ever hope to provide.

And I assure you that the business community – and by that I mean the North American business community – will continue to have a seat at the table as we move forward on the homeland security debate.

As I mentioned, from time to time, our relationship comes under pressure – and there are plenty of pressures today. But as far as I'm concerned, these tense and challenging episodes are "all in the family" – because Canadians and Americans really are family. We can overcome differences or agree to disagree…that's the strength of our relationship.

I believe the future of U.S.-Canadian relations is bright, in part because our economies continue to grow, gain strength, and become more interdependent.

Canada's recent economic performance has been impressive. Its policies to reduce debt, cut taxes, and balance the budget have paid handsome dividends. Job creation has been strong.

The U.S. economy has also found its groove. We're growing at or near 4 percent, and more than 260,000 new payroll jobs were created in our country last month. Business investment and profits are at healthy levels, interest rates and inflation remain low, and consumer confidence and spending are very positive.

But though both Canada and the United States share a bright economic outlook, there are challenges that dot the landscape. My message to you today – from a friend and neighbor – is this: "Don't get comfortable." The challenge of global competition is unrelenting; it feeds off nations that fail to continually innovate and become more productive.

We face increased competition from countries such as India and China, which are opening their economies and producing lots of engineers, computer programmers, and the like.

For Canada and the United States to keep their competitive and technological edge, they have to unleash innovation, keep their economies flexible, and adapt their policies to reflect a rapidly changing marketplace and major advances in technology.

No where is this more necessary than in the telecommunications industry, which I'd like to hold up today as a case study.

Telecommunications is the central nervous system of the American economy. It has revolutionized the way we conduct business, communicate with each other, educate our children, and deliver health care. Through the miracle of high-speed communications, companies have been able to reduce inventories, lower working capital, improve product quality, dramatically increase productivity, and offer consumers products and services at ever-lower prices.

Between 1995 and 2004, advances in telecommunications and information technology were responsible for 75% of U.S. labor productivity gains. Think for a second of how dramatically telecommunications has changed your own life — and if you have children from the grade school level all the way to young adulthood, think how different their lives are from your own, thanks to these technologies.

Even more impressive than the technological innovations we've witnessed over the past decade is the promise of emerging technologies. We're just beginning to understand the extraordinary benefits of WiFi, broadband, Voice Over Internet Protocol, digital TV, and smart radio. Think of the BlackBerry, a made-in-Canada product that has become a must-have accessory in Washington and elsewhere.

These technologies have the potential to open new highways of knowledge, add hundreds of billions of dollars to our economy, improve our schools and educational systems, and keep America competitive in the global economy. However, in recent years, the U.S. telecommunications industry has struggled.

Investment in telecommunications is rapidly declining, killing off jobs, delaying the development of new products and services, and threatening our competitive standing in the global economy.

Over a three year period ending last May, nearly three out of 10 job losses in the U.S. were in the telecommunications industry. Over a four-year period ending last July, the value of stocks in the telecommunications service industry declined by two-thirds. Over the same period, investment in the communications technology sector — the companies that manufacture equipment — fell by three-fourths!

Last year, the U.S. Chamber commissioned an independent study designed to examine why the telecomm sector is struggling even as the rest of the economy is improving. It's the only study of its kind.

We commissioned the study because we wanted a clear overview of the existing regulatory environment. We needed to identify the major choke points that are limiting investment and inhibiting the rollout of new products and services.

Our study revealed that the U.S. regulatory system is unfair, unpredictable, and not keeping pace with market realities. Regulators are attempting to rule a world that no longer exists.

In addition, our system of financial incentives and rewards for investment is out of whack. We have to find ways to protect incumbent companies' investments without hindering others from entering the marketplace.

Finally, the Federal Communications Commission has managed to create great regulatory uncertainty in seeking to implement the 1996 Telecom Act. And our federal courts have gotten into the mix by reversing FCC directives.

The recommendations of the study include: phasing out mandatory network-sharing rules; making more prime radio spectrum available; exempting high speed cable modem and digital subscriber lines from common carrier regulations; exempting internet services form state telephone service regulations; and finding new ways to fund and distribute universal service.

Our study found that modernizing telecommunications laws has the potential to generate a net gain of more than 200,000 jobs, create $58 billion in new capital investment, and increase gross domestic product by $634 billion. That's just in the first five years.

The Chamber is encouraged that the process of rewriting the 1996 law is moving forward on Capitol Hill, and since Canada faces similar regulatory challenges, we are pleased by the Canadian government's recent announcement that it too would begin a reform process.

I hope that the United States and Canada can learn from and help each other as we strive to fully unleash the technological innovation that has made our countries great.

Together, here in North America, we have created an unsurpassed standard of living for our citizens. Our economies are interdependent, and in the future they will become even more interdependent.

We value Canada as part of our family — and we Americans hope you always consider us part of yours. We value Canada as a friend and ally whose sons and daughters have sacrificed their lives for freedom alongside our sons and daughters. We value Canada for all you have done to help us meet the threat of terrorism.

We will always have some disagreements, but we must never let them cloud the reality that they pale alongside all the good things we do together for our citizens and for the world. And we must never allow disputes to poison or disrupt the absolutely essential commercial relationship between us. As much as any other single factor, our commercial relationship explains why our economies are the envy of the developed world today.

If there is anything that disturbs me about the current disagreements, is that some on both sides of the border seemed to have forgotten that all of our exchanges must occur in an atmosphere of mutual respect. We need more reason and less rancor. More light and less heat. And perhaps more listening and less talking. This is a challenge not only for our governments, but our business communities, the media, and our citizens.

President Bush and Prime Minister Martin are setting the right tone by announcing that they, along with President Fox, will meet in Texas later this month for a summit on North American issues. They have a full agenda, from regulatory issues to border security to trade disputes.

The fact that this meeting was formally announced right after the Prime Minister's decision on missile defense shows the maturity of our relationship. In other words, we are not easily thrown off course.

Ladies and gentlemen, Canada and the United States represent two proud, distinctive nations. Some analysts like to say that because of our shared border, one of the longest in the world, that we must get along, that we have no other choice.

I reject that view. There are neighboring countries all over the world that for centuries have in conflict. The U.S. and Canada will get along because despite occasional differences, we share the same love of freedom and democracy. And we share the bold vision of what a border can truly be – not a wall, but a bridge, not a zone of conflict but a zone of dynamic commercial exchange and vibrant opportunities for all our citizens.

And so we must work hard at fulfilling the promise of this vision. I pledge to you that we will put the full strength and resources of the Chamber of Commerce of the United States behind this effort. And we will succeed – of that I am sure.

Thank you very much.