Building Partnership in the Americas
Speech by Premier of Quebec Lucien Bouchard before the Los Angeles World Affairs Council on October 21, 1999.
Québec and California links go back a long way. Indeed they were quite close, for instance, in the past century, Prudent Beaudry was Mayor of Los Angeles for a year, at the same time his brother, Jean-Louis Beaudry, was Mayor of Montréal. Today, tens of thousands of Quebecers live in California, most of them around Los Angeles County, where they have gainful employment and promote yet closer business ties. Québec has also been present in Los Angeles, via an office or a delegation, since 1969.
I am very pleased to be in Los Angeles. On my first official visit to the United States, four years ago, I had just become Premier of Québec, and I spoke about our goal of turning Québec's public finances and economy around. When I explained that we planned to wipe out Québec's record-high deficit in just four years, I was met with a healthy dose of skepticism.
Today I am proud to report that we have reached our objective a year ahead of schedule. My government was the first Québec government in forty years to balance its books. This year, we are heading for a balanced budget for the second year in a row. With the clear competitiveness of our production costs and of our corporate fiscal packages now well-established--especially for investment, R&D (research and development) and the financial sector--our aim is to reduce personal income taxes in short order.
We matched our commitment to sound public finances with vigorous action for economic growth. Last year, our growth rate was right behind that of Canada and private sector analysis are predicting that we will challenge Canada's lead this year and next. The growth rate for private investment in Québec has not only caught up with that of Canada, it has outstripped it, standing at 4% in 1998, whereas it shrank by one-tenth of 1% in the rest of Canada. Predictions for this year show that the increase in private investment in Québec will stand at 9.4%, a full three percent ahead of Canada's.
The economic growth in Montréal and Québec City is especially strong, driving down unemployment and making these cities stand out as important focal points for new technologies. The well-known Montréal leading-edge sectors of aerospace, telecommunications, pharmaceuticals and biotechnology, as well as software and multimedia, continue to act as powerful magnets for growth, trade and investment.
According to Price Waterhouse, Montréal is fifteenth among the major North American cities in terms of population. But it now ranks ninth for the number of high-tech companies; seventh for the number of jobs in information technology; sixth in the pharmaceutical and biotechnology sectors; fifth in aerospace; and it stands at the very top for the proportion of the workforce involved in high-technology jobs.
Now and in the new century, Québec is a force to be reckoned with and a willing partner with which to do business in Los Angeles, on the continent and in the Americas. I would like to tell you why.
Québec in the ‘90s: The Continental Decision
One of the fundamental reasons for Québec's current success lies in a collective decision made just over ten year ago. The challenge had a name, “Free Trade with the United States.” This was a very controversial issue in English-speaking Canada. But in Québec, the language difference, the very strength of Québec's identity, made us less apprehensive about lowering economic barriers. In a sense, along with our resolve to be true to ourselves, to protect and promote our language and culture, we made the decision to become active players on the continent, to play our North American card to the fullest.
So a consensus emerges in Québec, first in the business circles and in the Pro-Independence Party, then in the Federalist Party, which was in power in Québec City at the time. In 1998, when Canadian Prime Minister Brian Mulroney called an election on this very issue, I happened to be at his side, as a Minister in his government. A majority of English-speaking Canadians voted against free trade, but a large majority of Quebecers voted in favor and tipped the scales. When the pact was later extended to include Mexico, in what became NAFTA (North American Free Trade Agreement), Québec once again played a decisive role in getting Canada onboard.
This has not gone unnoticed. On a recent trip to Montréal, U.S. Secretary of Commerce William Daley highlighted this point when he said, and I quote, “NAFTA would have never been completed without the tireless efforts and vocal free trade advocacy of the people and government of Québec.” Years have passed, the results are in, and they have changed everything. I would like to look at this chart showing Québec exports since 1990.
This is the growth of our exports worldwide over the period, including exports to our Canadian neighbors (+70%).
This is growth of our exports to Canada (+16%).
Now look at the growth of our exports to the United States: an increase of 155% in a mere eight years. The U.S. is now, by far, Québec's main trading partner, a very significant economic development.
If we consider Québec exports to California alone, they have more than doubled with a growth of 127% these last eight years, approaching 1.3 billion U.S. dollars. Our exports of electronic and telecommunication equipment have increased six-fold, while our exports of transportation material (mostly cars and planes) have doubled.
Now, I can almost hear you thinking: “That is all well and good for Québec, but what is in it for us?” The answer is jobs. Although the trade balance is favorable for Québec, there has also been a surge of U.S. exports to Québec as well as an increase of Québec investments in the U.S.
It is estimated that around 300,000 U.S. jobs depend on sales to the Québec market, and Québec companies established in your country now directly employ 60,000 American citizens.
In the United States, California is our tenth economic partner and has become a natural magnet for Québec business people, scientists, artists, and key decision makers.
Some of them are with me today - among them, CEOs of medium and large-size corporations, as well as many researchers and manufacturers in the information technology industry, particularly in the 2-D and 3-D animation sectors and also in the film industry. Representatives also accompany me from the tourism, education and cultural sectors. I would like to thank them all for being here and for testifying to the growing strength of our relationship with this great city and the great State of California.
Companies like Softimage, Toon Boom, Kaydara, Hybride Technologies and Discreet are well known here in California. They have already become world leaders as 2-D and 3-D animation software developers, service companies or movie producers from Quebec. All of them have profitable partnerships with the movie industry here in Los Angeles.
I am sure you will be surprised to learn that, worldwide, 60% of special effects in movies and advertising are made possible thanks to software developed in Québec. As far as 2-D digital designs are concerned, most are created by Toon Boon software. The average Angelinos’ connection to cyberspace probably runs through Québec's Nortel Internet switching and routing equipment, which dominates the world market. You may not be aware either that many of the special effects seen in dozens of movies like Titanic, The Matrix, Jurassic Park, Independence Day, The Fifth Element, and the first episode of Star Wars were made possible by software developed by Discreet Logic in Montréal's Cite du Multimedia, or by Softimage. And yes, our software designers take responsibility for the partial destruction of New York City, in the movie Armageddon.
So you see, in a very real sense, there is a Québec component to Los Angeles' success, just as there is a Los Angeles component to Québec's success.
Now, I am going to let you in on a little-known secret.
Québec is currently the 8th largest trading partner of the U.S.--behind Canada, Japan, and Mexico, the top three--but it is more important to your economy than countries like France, Italy, South Korea or Brazil.
The upsurge in our relationship with the U.S. is not limited to economics and trade. Here in Los Angeles and in other major American cities, Québec culture is no longer an oddity. Beyond the successes of Celine Dion, the plays of Robert Lepage and concerts by the Montréal Symphony Orchestra, every year now brings about 200 Québec cultural events of all kinds to the U.S. and we feel we have just begun. Did you know that, according to Variety “O”, the new show in Las Vegas by Québec's Cirque de Soleil, is and I quote, “grossing more money, week to week, than any attraction in showbiz history.” We must be doing something right and you will be able to see with your own eyes at Santa Monica Beach by attending the Cirque de Soleil's latest show called Dralion, where West meets East.
Quebec: A Magnet for Investors
Turning to investment, a study published last month by KPMG, an international consulting firm, is titled, “The Competitive Alternatives: "Comparison of Business Costs in North America and in Europe." It notes that Québec demonstrates costs consistently below the average for Canada, which is the lowest-cost country overall. Québec's competitive cost advantages include low land construction, labor, electricity and telecommunications, and a low corporate income tax rate for manufacturers.
A further excerpt from this study concludes that the four Québec cities examined - Sherbrooke, Québec City, Montréal and Hull - all show low costs, relative to the 52 cities examined, ranking in first, second, fifth and seventh places.
Finally, potential investors could be happy to read that, and I quote again, “The effective corporate income tax rate in Québec is lower than the Canadian average, and lower than in either the United Kingdom or Austria.”
Identity and Economy: The Québec Advantage
This brings me to another key feature of Québec's business dynamism, one that may also illustrate an important facet of globalization. We have found that our difference, our language, our identity have become an economic strength.
Politically, as you probably heard, the discussion about Québec's future is real and intense. Yet above all it is a peaceful and democratic debate that will be decided at the ballot box. Whatever position Quebecers may have on this issue, whether we think it is best for Québec to become sovereign or to remain in the Canadian federation, I am sure of one thing: no matter what happens, we Quebecers will work to increase our economic and other ties with our neighbors, be it with Canada, the United States, Latin America or elsewhere in the world.
As you know, Québec is the only territory in the Americas where French is the official and common language. The seven million of us stand next to the most powerful cultural and economic force the world has ever known. We account for a mere 2% in this largely English-speaking environment. No other industrialized nation lives in so culturally precarious a situation. So we make no excuses for celebrating our differences and asserting the right of our French-speaking citizens to work and have services in French and to live in a commercial environment that reflects their culture.
Like any other society, we make sure that most newcomers integrate into the mainstream through a common education in French, while making full allowances for our English-speaking minority, foreign investors and strategic workers. The bottom line is that thanks to these measures Québec is the only part of Canada where the proportion of French-speakers is not shrinking.
On the contrary, Québec's linguistic and cultural output has never been greater, enriched by a new generation of Quebecers born abroad, or here from first generation immigrant parents, and schooled in French.
How is this good for our economy? Well, consider this: spending on R&D has grown 50% faster in Québec than in the rest of Canada. What is the explanation? Economic factors cannot paint the whole picture.
The new economy is based on knowledge, innovation, imagination and originality. The key success is access to a broad range of knowledge and the ability to integrate it into new products.
Our interface with the world's greatest source of innovation, the United States of America, is well known. 600 U.S. companies are established on our soil and 320 Québec companies are active on yours, and we don't need subtitles.
Half of our active population is bilingual, this proportion rises to 60% of Montréal's workforce, while 80% of the engineers and managers in our metropolis are fluent in both English and French.
Our advantage is the fact that we have built upon our French identity to gain access to the second largest source of innovation, Europe--again without subtitles.
Universities in Québec and Europe have more than 400 joint research programs. With France alone, over 100,000 people have now taken advantage of on-the-job exchange programs over the years. More than 600 European companies have set up shop in Québec, many of them using Québec as a preferred entry point to the continent.
When our researchers publish joint research, they do 35% of their work with American scientists, and 40% with their European peers. This has opened a real-time knowledge link between the U.S., Europe and Québec.
Our software and fashion designers are in demand because, we are told, they have both the down-to-earth, practical, productive bent of American designers and the eclectic tastes of European creators, with Québec's originality thrown in.
In our clusters of industries in aerospace, technology, biochemical and multimedia American, European and Québec corporations work side-by-side, exchanging ideas, developing joint ventures and training a manpower pool that is superbly connected to what is and what is to come.
The American and European flow of people, ideas and companies meets in Québec as they seldom do elsewhere. The fact that Québec managers, researchers and qualified workers live in a technical, scientific and cultural environment that constantly draws on both worlds, gives them an advantage in R&D, design, production and marketing. This creative mix may help explain why a people of seven million now stand among the top ten nations in information technology, aerospace, pharmaceuticals and engineering.
Preserving our difference and our identity within North America has always been a cultural necessity. In this decade, which has been our North American decade, we now find that it has also been a sound investment.
This is what we have in mind as we turn to a new challenge.
The Next Decade: Looking to the Americas
Looking to the new decade, we are setting our sights on the Americas as a whole. From the outset, my government has been supportive of the planned free-trade area encompassing all of the Americas. Québec itself is the sixth largest economy out of the 35 in the Americas.
We think we can make a constructive contribution to this debate because of our unique experience in furthering integration while preserving our identity. We feel that the integration of the Americas, to succeed, must be more than just an economic endeavor. The positive economic impact of free trade on the participating nations is no longer in question, but inside and outside the United States, an important debate is growing on the social and cultural impact of globalization - a debate concerning the ability of nations to nurture their distinctiveness while lowering economic barriers.
In order to benefit from the economic promise of globalization, we need to find a comfort level at which nations will feel that their social and cultural diversity is being preserved, as well as their ability to make decisions adapted to their own realities, to their traditions, and to their dreams. A growing number of nations, Québec among them, say yes to the market economy, but no to the market society.
In the process of integrating the Americas, we have an opportunity to meet these challenges on a manageable scale. We are dealing with about 800 million people, grouped around four major languages and a number of common traits and history, along with a shared willingness to look at converging solutions. If we do this right, we can create precedents that will then be helpful on the world stage.
In NAFTA, by insisting on companion agreements on labor and the environment, the Clinton Administration paved the way for a more comprehensive view of integration. At the Miami summit in 1994, which launched the integration of the Americas, initiatives on democracy, justice, human rights, education and poverty accompanied the economic objectives, and quite rightly.
Negotiations toward the January 2005 deadline, to achieve free trade from all of the Americas, are now structured in a way that will be especially sensitive to the small economies that are the fabric of Latin America. For the first time, there will be a voice for members of what we call the “civil society”.
We in Québec have been at the forefront in fostering debate within the civil society and between elected officials of the Americas on the impact of integration on diversity. In 1997, our National Assembly in Québec City welcomed 900 participants from 28 countries in the Americas to join in this discussion and to create a permanent body, the Conference of American Parliamentarians.
In December, over one thousand legislators and government officials from the United States will gather in the old city of Québec for the Annual Assembly of the Council of State Governments. The theme of the meeting will be the integration of the Americans. This will be the first time the Council meets outside the U.S., probably because Québec is proud to be its first non-U.S. member, but also because its members know about Québec's commitment to the Americas.
If the nineties have been the decade of our rediscovery of North America, we announced in November that we intend to make the next decade that of the Americas. Our aim it to make Québec a dynamic, constructive partner in the building of the Americas.
For years, Québec has been present through its Delegations Generales and offices in New York and Mexico City. A third one has been operated in Buenos Aires. What we call “commercial antennae” are located here in Los Angeles and in Atlanta, Boston, Chicago, San José de Costa Rica, Lima, Bogota, Caracas and Santiago.
In economic terms, besides the U.S., our firms have already begun to make their mark in Latin America. Québec companies build houses in the Dominican Republic, set up telecommunications infrastructures in Uruguay and in Brazil, process wood and minerals in Chile, run printing plants in Peru, Colombia and elsewhere, and they are becoming financial players in Argentina and Mexico.
The international arm of our power company, Hydro Québec, took on a new entrepreneurial mandate just two years ago, and it is already building a power line in Peru, building or running power plants in Costa Rica and Panama, investing in natural gas in Mexico, and bidding on major projects all over Latin America.
In all, 300 Quebec companies are active in Latin America. Our goal is to triple that number over the decade and to bring our small and medium-sized companies in their wake.
Last May, I led a major trade mission to Mexico, accompanied by more than a hundred business people as well as university presidents, in what was the first of many such efforts yet to come.
One cultural asset we bank on is our linguistic abilities. Already, we find considerably more people fluent in Spanish, as a third language, in Québec than in the rest of Canada. One of our goals is to increase the number of trilingual Quebecers by 50% in a decade, bringing it up to 12% of the active population at large.
We want to foster a steady flow of exchange between north and south, especially among young people, students and workers in training. Creating interpersonal bonds among youth in the Americas is the best investment we can make in an integration that will be both culturally respectful and economically successful.
For all these reasons and many more, we Quebecers look to the new millennium with confidence. We come with balanced books, with a metropolis that is taking the high-tech road with a vengeance and with a capital city that is a crossroads for democracy. By inventing a way to ride the currents of economic integration while remaining true to our identity, we are building lasting relationships with friends like you in Los Angeles and across the U.S., as well as in Mexico and throughout Latin America. We feel ready for the challenges to come.