By Randall Palmer
Canadian Prime Minister Stephen Harper said on Thursday a proper approach to trade should focus not just on lowering barriers to trade but also on having flexible exchange rates.
Harper's remarks appeared to be aimed at China, although he did not mention that country by name. Canada has long criticized that country's inflexible foreign exchange regime.
Harper made his comments as he told a business audience that a key lesson of the financial crisis was that the world had to think in terms of a global financial system, not just narrow national interests.
He said that meant, for example, that each country should have financial regulation that the whole world can have confidence in, and also not building up huge surpluses by keeping a currency artificially low.
"We've got to have approaches to trade that don't just keep borders open but assure that we have things like flexible exchange rates that prevent unsustainable imbalances from growing in our global economy," he said.
"So that's the biggest single thing — we've got to have a shift, particularly from the major players, towards a systemic view of global economic management, not simply national interests writ very narrowly."
His appearance concluded a two-day visit to the United States, which began with talks with President Barack Obama, during which they compared notes on the upcoming Group of 20 summit, which is focusing on how to prevent another crisis.
He did criticize, during a question-and-answer session in New York, climate change legislation in the House of Representatives on the grounds it might provoke protectionism.
The House bill has similar objectives to what Canada wants to do, he said, but what concerns him is the application of tariffs on countries deemed not to be compliant with efforts to reduce greenhouse gas.
"I believe it essential to get all the major emitters contributing to this problem. The way to get them to contribute is not to employ tariffs. If we employ tariffs, we all know that will become a front for protectionism quicker than you can say hello," he said.
He asserted that Canada had entered and was exiting the financial crisis stronger than other countries.
"To paraphrase Warren Buffett, as the tide went out last year, the crisis exposed those who had been swimming naked. And it turns out that Canada was not only not a skinny dipper but one of the strongest swimmers," he said.
Elaborating, he said his country had not had to bail out any banks and three of the top 10 banks in North America were now Canadian, joblessness was lower than in the United States and Canada's deficit and debt were relatively small.
He said the global economic recovery was under way but was fragile and the G20 should not let up now.
"We must…continue implementing stimulus measures until we see a much stronger rebound in private investment. But at the same time, there must be exit plans from high levels of government deficits and debt so that capital investment in the private sector is not eventually crowded out," he said.
Harper said it was important for the G20 to continue its efforts to fix the financial sector, adding that toxic assets still had to be purged from the international system.
