Speech to the Canadian Swiss Chamber of Commerce

Thursday, February 25, 2022



Mandarin Oriental Hotel, Geneva

Monday, February 1, 2022

 2010 and Beyond: The View from Davos and What It Means for Canada

It’s a great pleasure to be with you here tonight, and to have the opportunity to share with you some of my observations from the World Economic Forum’s 40th Annual Meeting at Davos, Switzerland and what I believe they mean for Canada. 

I’m delighted to see my former colleague, Sergio Marchi, here tonight. My first trip to Switzerland was in 1998, when as an opposition critic, I accompanied the then Minister of Trade, Sergio Marchi, on a trade trip to Switzerland. Sergio served Canada well as Trade Minister and later as Canada’s Ambassador to the WTO. I went on to serve Canada as Minister of Public Works and government services, and here I am in Switzerland, once again as an opposition critic. 

During the four years since my party was given its ‘sabbatical’ in January 2006, I’ve had the opportunity to participate in three World Economic Forum Annual meetings  in Davos, two “Summer Davos” conferences in Dalian, China, and two U.S. ones in Washington, D.C.  

At Davos 2008, the party was still going strong. The champagne corks were popping. When Larry Summers urged caution he was chided by Former U.S. Treasury Secretary John Snow for not having faith in the resilience of American economy. John Thain rode into town like a knight in shining armour, as the new CEO of Merrill Lynch. 

Davos 2009 convened just weeks after the global financial meltdown. The party was not only over—it seemed like the worse hangover ever. Mr. Thain was no longer head of Merrill Lynch and finance ministers from around the world were in the midst of preparing budgets with unprecedented levels of government spending as part of a synchronized global effort to prevent the financial crisis from becoming another Great Depression. In fact, nobody was certain how effective this global stimulus experiment would be in averting a deeper downturn. 

At Davos 2010, the same finance ministers and leaders who just a year before were nervously questioning whether their stimulus budgets would be the right medicine in the right dosage, were dislocating their arms patting themselves in the back for having known all along exactly what to do.

If Davos 2008 was the end of a wild party, and Davos 2009 was the morning after hangover, Davos 2010 was the more moderate Sunday brunch, where people are recovering but starting to open the bubbly again as they nurse their mimosas and plan for the future. 

I’d like to share with you some of what I picked up in the sessions, hallways, and hotel bars of Davos over the last few days.  

The Economic Recovery and Financial Regulation 

Protectionism, particularly U.S. “Smoot-Hawley” style protectionism, was discussed in great length.  Given the crowd, you can imagine protectionism wasn’t popular. But the political temptation to close down borders was acknowledged—along with, I must add, its economically toxic side effects. It’s fear, uncertainty, and income disparity that feed political pressures for protectionism. The consensus was that countries can do more to ensure the benefits of free trade are shared more equitably and, as such, increase the base of support for free trade. 

Other years I’d heard discussions on how to get Doha back on track; this year, the talk about Doha was sidelined by tariffs on Chinese tires and Buy American provisions. I heard one interesting reference to Doha, comparing it to the recent climate change meetings in Copenhagen: “Coha” and Doha were both doomed by similar parochial self-interest.  

Interestingly, many Asian countries—especially China, India, South Korea, and Japan—seem committed to deepening economic cooperation throughout the region. For example Thailand’s exports to India increased by 17 percent in 2009. 

Harvard economist Ken Rogoff, among others, believes the most serious risk to long-term recovery is the sovereign debt crisis. It is broadly feared that as governments have to pay the piper, higher taxes, deep spending cuts, and higher interest rates will slow the recovery.  

A quick glance at the deficit to GDP ratios of some of the major economies confirms this story: the U.S. is -10 percent; the U.K., -14.2 percent; Spain, -11.8 percent. Canada fares relatively well, at 3.2 percent, although we are not completely out of the woods either. Debt to GDP ratios tell a similarly grim tale, with many countries, such as the UK and the US, approaching or surpassing the 60 percent threshold. In industrialized nations, our aging demographics could further hinder deficit elimination. 

Another popular question pertained to financial regulation and the rise of the G20. How much is enough? How much is too much? Should we have a global tax on banks to create a better reserve fund? 

Canada’s banks and regulatory framework were widely lauded. Indeed, Paul Volcker, Chairman of President Obama’s Economic Recovery Advisory Board, held out Canada as a model for the world. In the 1990’s, Canada bucked the global trend, deciding against deregulation and to maintain relatively conservative reserve requirements. These decisions were made under the leadership of Jean Chrétien and Paul Martin. 

Talk of capital requirements, however, was subordinated by the more incendiary political issue of banker pay packages. Martin Wolf, columnist for the Financial Times, observed that Stan O’Neil received a bonus of $161 million for his final disastrous year at Merrill Lynch, which would have been enough to pay the entire Federal Reserve board for 100 years. 

Of course, the shape of the present recovery was at the forefront of participants’ minds. Larry Summers, economist and Director of the White House’s National Economic Council, called the economic recovery a “statistical recovery, but a human recession”, noting one in five Americans between 25-55 is unemployed. 

Mr. Wolf coined his recovery predictions with the acronym LUV: “L” shaped in Europe, “U” shaped in the U.S., and “V” shaped in emerging markets. 


The recent disaster in Haiti captured the hearts and minds of the global community. Davos was no exception. A special session, chaired by President Bill Clinton, was organized with the goal of leveraging the support of the WEF’s diverse membership to help Haiti with immediate relief as well as over the long term.

The focus was on how the global economic community can make a difference—by supporting the short term disaster relief but also by engaging Haiti in a constructive manner to assist with the reconstruction of the country.  

Brazil`s foreign minister, Celso Amorim, suggested that all tariffs should be eliminated to encourage economic growth and the establishment of a low-cost manufacturing base, similar to what was done with regards to Indonesia following its major disaster. Harvard international development professor and former Venezuelan cabinet minister Ricardo Hausmann agreed. Leaders of all stripes were encouraged to consider both the humanitarian and long-term economic benefits of investing in Haiti. 

The 3Es: Energy, Environment, and Economy 

The 3Es (energy, environment, and economy) dominated discussions, however. Topics included carbon pricing, energy reform, carbon capture and storage (CCS), eco-efficiency, sustainable design, electric cars, energy grid modernization, smart grids, smart meters, alternative and clean conventional energy.

The “Davos” consensus among global government and business leaders is that the discussion on the environment has shifted from one of responsibility to the biggest economic opportunity of the 21st century. The 3E’s will play an integral role in the global economic recovery and will help define a global economic restructuring. 

With regards to the environment, the future of the Waxman-Markey Bill (named after Democrat Representatives Henry Waxman of California, chairman of the Energy and Commerce Committee and Edward Markey of Massachusetts, chairman of that committee's Energy and Environment Subcommittee) was another popular discussion at Davos, particularly surrounding the potential imposition of a carbon tariff on exports. The Bill, the American Clean Energy and Security Act of 2009, would establish a variant of a cap-and-trade plan for greenhouse gases and was approved by the House of Representatives last June by a vote of 219-212. 

Rumours of the death of Waxman-Markey are exaggerated. In a meeting with Senator Lindsey Graham, he indicated that the Obama administration’s movement towards nuclear power was helpful in gaining Republican support for the Bill. Indeed, Obama was clear in his State of the Union address: “to create more of these clean energy jobs, we need more production, more efficiency, more incentives.  And that means building a new generation of safe, clean nuclear power plants in this country.”   

The outcome of Waxman-Markey is of particular concern to Canada as we are America’s biggest energy supplier and the U.S. is our biggest export market. I spoke with Canadian energy leaders in Davos. There is an industry consensus that Canada ought to deepen its energy relationship with the U.S. based on three pillars: coordinated carbon pricing mechanisms, integrated smart energy grid corridors, and green technology research and development partnerships. We shouldn’t be waiting for the U.S. to impose a carbon price on us. 

The Rise of China, India, South Korea, Brazil, and the Emergence of Africa: A Multipolar World is Upon Us 

The “rise of the rest” was a cross-cutting topic at Davos. With the G20 growing in importance and growth roaring ahead in the East, it is impossible to ignore the growing power and influence of the emerging economies: emerging markets will be a driving force of the economic recovery.

The demographic pressures that are looming in the West, including health, social  security and employment pressures, only widen the sizeable economic space that emerging markets have already carved out for themselves. Consequently, I’d like to take a few minutes to highlight Davos’ insights into the emerging giants.  

Since 2003, 31 million Brazilians have moved into the middle class; 20 million have been lifted out of abject poverty and Brazil has moved from an IMF debtor to an IMF creditor. 

As for South Korea, I remember 25 years ago, in the fall of 1985, when I started my first semester at Dalhousie University a couple of my friends were driving the “new-to-Canada” Hyundai Pony. It was viewed then as a cheap, disposable car (similar to a Lada or a Skoda) that parents would buy for their high-school-aged kids. Today, Hyundai is winning J.D. Power quality awards, offers luxury cars, and has class-leading safety records. In an emblematic reversal of fortune, in response to the Japanese Toyota’s recent recall backlash, Hyundai is offering $1000 rebates to those trading in their Toyota for a Hyundai. 

Last year, Korea’s Samsung became the biggest IT company in the world with sales of $117 billion—surpassing Hewlett Packard‘s $114 billion. Part of this growth is because of Samsung’s recognition of the benefits of embracing green energy technology: Samsung recently invested $7 billion in wind and solar projects in Ontario among other green projects. 

India’s economic growth has been impressive over the past decade—in 2008 India’s GDP grew by six percent despite the global economic crisis. The country is in the process of investing massively in its infrastructure: 80 percent of the infrastructure that India will have in 2030 has not yet been built. This represents an incredible opportunity for Canadian business. Canada’s large engineering companies are well placed to win contracts as well as assist with financing, especially given the relatively healthy state of Canada’s banks. 

Africa could be one of the best places in the world to invest over the next ten years, according to David Rubenstein of the Carlyle group. China and Brazil have deepened political ties and fostered economic links with resource rich Africa. Africa has not, however, been a priority for the current Canadian government, which is unfortunate given our expertise in the resource extraction sector. Furthermore, Canada is unburdened by any history of African colonialism. To fully embrace this opportunity, Canada’s relationship with Africa needs to grow from one of aid obligation to trade opportunities.  

I spoke earlier of the 3E’s: energy, environment and the economy. No country has embraced the 3E’s like China. Not only is China growing today, they are fast becoming world leaders in the global economy of tomorrow—which is undoubtedly green in colour.  

In September 2007, upon my return from the Summer Davos in Dalian, I wrote an Op-Ed titled “Getting rich by going green” on the rise of China as a clean-tech superpower, and the economic opportunity for Canada to be China’s clean energy partner. Since then, Canada has fallen behind while China has moved forward. Last year, China jumped past Denmark, Germany, Spain, and the U.S. to become the largest maker of wind turbines in the world. Vestas of Denmark just built the world’s largest wind turbine plant near Tianjin, a Chinese city of 6 million which will host the September 2010 WEF summer Davos.

China is becoming an exporter of clean-tech too. Last November, a deal was announced to supply Chinese wind turbines to a massive wind farm in Texas.Two years ago, China became the world’s largest manufacturer of solar panels.  

Representative Ed Markey (of the Waxman-Markey Bill in front of Congress) compares lecturing the emerging economies like China on the environment is like “preaching temperance from a bar stool.”

The opportunity that China sees in the green economy is reflected in the amount China dedicated to green energy investment in its stimulus package: $47 billion. In comparison, the U.S. earmarked $66 billion; South Korea $16 billion (representing 85 percent of the total stimulus package); Spain $9 billion; Germany $4 billion; Australia $4 billion; UK $3 billion; France $2.7 billion; Brazil $ 2.5 billion. Canada: only $1 billion on green stimulus. 

In recent years, Chinese cities too have cleaned up their act.  For example, in Shanghai, ten years ago there was no high speed transit. Now there is 200km. By the May 2010 opening of Shanghai World Expo there will be 400km; within ten years 800km. Shanghai has also reduced its share of coal-generated electricity from 91 percent to 70 percent over the past decade. RMB 50 billion has been spent on water and sewage treatment. Green space is being increased from 1.5 metres per person to 12 metres per person.

As over 10 million Chinese move to cities every year, China is engaging the global giants in urban design to build what will become the greenest cities on earth. As China’s growth continues, its energy demands will rise as well. It is estimated that China’s energy consumption will grow about 15 percent annually. The growth rate of China’s electric power generation, for example, will be nine times faster than that of the U.S. for the next decade.

Although China is also working to reduce its energy intensity, coal will still represent two-thirds of China’s energy supply in 2020. To reduce energy intensity, China is imposing tougher environmental regulations on its electric utilities and investing massively in new technology. Last year, China spent an estimated $440 billion on clean energy investment. Investments of this calibre will continue.

Last week the Chinese government announced a Special National Energy Commission, a Cabinet Committee headed by the Prime Minister. According to Chinese economic leader Fan Gang, China is also considering a carbon tax as part of its next five year plan, in part to avoid carbon tariffs being imposed on China exports as other countries implement carbon pricing mechanisms.

As China builds a new modern energy system, it has become the largest market in the world for smart grid, smart meters, and clean energy production technology. Globally, energy demand will grow by 40 percent over the next 20 years. Hydrocarbons will still represent 80 percent of energy mix. Consequently, the long-term incentives for investment in clean coal technology are clear. Coal is cheap and plentiful—wind is 40 percent more expensive than coal, and solar is twice as expensive.

Energy and government leaders at Davos share a strong interest in clean coal technologies, for example carbon capture and storage (CCS), which represents a tremendous opportunity for Canada. Canada was an early leader in CCS—which will be integral for coal-reliant economies like China to reduce their carbon emission—because of projects like Weyburn, Saskatchewan, pioneered by a partnership between EnCana and the Martin government.

In North America, with some exceptions, like Ontario, our regulatory frameworks do not adequately incentivize green investment. Outdated regulations combined with utilities that fear stranded assets from legacy investments in dirty energy production and antiquated, inefficient, transmission infrastructure, are slowing real progress in the West while China moves forward.  It is clear that the rise of the rest has begun in earnest. As Western economies withered during the economic crisis, the emerging economies forged ahead. Their ascension heightens global competition and opportunity. Nowhere is this more evident than in the green economy.   

The Global Race to Go Green: Our Competitiveness Depends on It! 

The Great Game of the 21st century will be the race to capture the clean energy market. And in the global clean-tech race, emerging economies like China are aggressively building first mover advantage.

At stake are trillions of dollars of export revenues and millions of jobs. Western politicians and corporate leaders are taking note. China has realized it will never get rich by making socks and t-shirts. It missed out on the tech boom of the 90’s, but sees opportunity to be an innovation and manufacturing pioneer in the clean energy industry. Not only is there a huge market at home, global demand is growing and the field is wide open; no country currently dominates the industry. A recent article in the Financial Times noted that China has experienced the strongest growth in scientific research over the past three decades of any country in the world.

Brazil has achieved strong growth as well. China is also graduating hundreds of thousands more engineers than any other country. As most innovation takes places incrementally on the shop floor, China is suiting itself up for the economy of tomorrow.

The emerging economies are thus well poised to take advantage of the innovation and technology that will be essential to profit from the green economy.  Indeed, Bill Gates echoed this point at Davos. He stressed education as the essential baseline of any successful economy: if you get that right, everything will fall into place. We need smart people in science and innovation, smart people as entrepreneurs, and smart people as bureaucrats. Indeed, Bill Gates argued that bad bureaucrats can do a lot of damage.

In Canada, we have the knowledge base to start with—and one of the most professional public services in the world I might add—but China and other countries are catching up fast. In the words of Senator Lindsey Graham, a Republican from South Carolina, “Six months ago my biggest worry was that an emissions deal would make American business less competitive compared to China. Now my concern is that every day we delay trying to find a price for carbon is a day China uses to dominate the green economy.

China has made a long-term strategic decision and they are going gangbusters.”France’s finance Minister Christine Lagarde concurred “It’s a race and whoever wins that race will dominate economic development. The emerging markets are well placed.”

“The low carbon economy is the future” said Professor David Li Daokui, of the Centre for China in the World Economy. The stellar growth trajectory of the emerging nations has allowed them to realize huge gains in the new, green economy, undermining the West’s traditional position as the leader in technology and innovation. While Western governments like Canada were talking about climate change, China has been moving. Unfortunately for us, there is no such thing as a “first talker” advantage—only a “first mover” advantage.  

Canada is Out of Step With the Green Davos Consensus 

Canada was alone in Davos defending environmental inaction. The prime minister said that measures to address climate change will hurt the economy with “real impacts on jobs and economic growth”  and that “there are serious tradeoffs with economic imperatives in the short term.” 

In response Spanish Prime Minister Zapatero countered: “There is nothing that leads us to believe actions to address climate change would call lower economic growth.” China is like a well managed family owned company, focused on long-term positioning not short-term results.  

Canada is well placed to take advantage of these opportunities. We can leverage our existing expertise in the traditional energy sector to become a leader in clean energy. Canada has the knowledge base to become a global innovator in all areas of clean technology. We were an early leader in CCS—which will be integral for coal-reliant economies like China to reduce their carbon emission—because of projects like Weyburn, Saskatchewan, pioneered by a partnership between EnCana and the previous government.  

Canadas position on climate change at Copenhagen and Davos is hurting Canada’s reputation on the world stage. It is bad environmental leadership and bad economic policy.  The US invested six times more per capita than Canada in clean energy through their stimulus package. When China and the US signed an agreement on CCS technology—an area where Canada is a global leader—we were not even at the table.

In the hypercompetitive green economy, if you’re not at the table, you’re probably on the menu. As the world puts a price on carbon, environmental laggards will become economic laggards. China realizes this. The US realizes this. In his State of the Union address, President Obama said that “the nation that leads the clean energy economy will be the nation that leads the global economy.”

Canada needs to increase strategic investments in green technology and actively seek partnerships to sell our innovations—both in green tech and in transportation, sewage, and water management infrastructure—around the world. We should be forging partnerships with China where Canada has proven leadership such as CCS, as well as our areas of traditional strength such as transportation and infrastructure.  

Canada also needs to increase our political presence abroad in important international fora. Take Davos for example. France, Australia, Turkey, and even South Africa, came to Davos with large, integrated delegations, combining business and government leaders. They are cooperating, leveraging the access that Davos offers by teaming business leaders with ministers and heads of state—essential to open doors in India and China. The French nuclear giant Arriva walks into meetings with Chinese and Indian officials with French cabinet ministers in tow.

These countries are hosting receptions and providing visible networking opportunities for their companies. The advantage they glean over Canada is clear.  

Canada needs to step up at forums like Davos. More broadly, we need to increase DFAIT’s presence—especially trade officers—around the world in order to ensure that we have the base necessary to allow cutting-edge Canadian companies to compete.  

The Davos consensus is clear: green technology will be the economic engine of the future. Without investments in eco-efficiency, our traditional industries will be less competitive and Canada will lose its place in new green industries.

Those countries which move now with policies that foster green energy and technology will reap the rewards as the global economy returns to growth.  Canada can still compete for the green jobs of tomorrow. But it will take strong leadership now. 

Thank you.


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