DIALOGUE WITH THE PRIME MINISTER OF QUEBEC
ABOUT THE PRESENT AND THE FUTURE

Speech delivered by the Prime Minister of Quebec,
Mr. Jacques Parizeau
before
the Council of the Americas and
the Council on Foreign Relations

New York, December 12, 1994

Thank you, Mr. Ambassador.
Ladies and gentlemen,

Last September 12th, in a general election, Quebeckers have charted a new course for themselves. Three very productive months have gone by since then. Important decisions in terms of legislative agenda, financial strategy and political process have been put on the table for all to see and discuss. By being here with you today, I would like to give you some insight into this new course.

Some of you have known me for many years. Some of you have dealt with the Parti québécois for some time now. And while you may not agree with us all the time, it is fair to say that we do not play "guessing games" when doing business. We say what we mean and we mean what we say.

In taking power, one of our major concerns was - and acutely remains - the condition of Quebec's economy. As you may know, for eight years I was Minister of Finance. In becoming Prime Minister, I chose Mr. Jean Campeau as Minister of Finance. He is here with us today. For 10 years, he was President of the Quebec Caisse de dépôt et de placement.

On the bright side, we are pleased, if not enthralled, by the present upturn in Quebec's economy. Quebec is slowly coming out of the last recession with increased productivity. Our exports are helped by the current value of our currency and, of course, by the continued stamina of our main foreign client - namely you.

As you know, Quebec is the U.S.'s 8th largest trading partner. Our exchanges with you amount to 40% of the total trade between the U.S. and Mexico. They are two and a half times the trade you have with Brazil and eight times more than your exchanges with the next NAFTA member, Chile. We are talking about a hefty 40 billion Canadian dollars worth of trade. So obviously, when you do well, we do better. And especially here in the Northeast, when we do well, you feel better.

This year our exports grew by 20%, and they had already grown last year by almost 25%. Profits are up 41% for the first semester and investment plans are finally picking up. Private-sector economists estimate our growth this year to reach a higher-than-expected 3.9% and the average forecast for next year is a robust 3.4%.

This growth has spurred a long-delayed return of consumer spending, up nearly 7% for the first nine months of this year over last. The impact on job creation is far short of our wishes; nonetheless, it has climbed 2.3%.

What is striking is the new mix in our exports. Our most important export is telecommunications equipment followed by cars. Planes and plane parts are not far behind. I can remember a time when most Quebec exports were raw materials. Now, out of our 10 most important exports to the U.S., only two are raw materials.

Montreal is now a major hub for the pharmaceutical, aerospace, telecommunications and software industries. This has added to our already strong presence in transportation equipment, engineering, aluminum, hydroelectricity, pulp and paper, and the like. So I am more than confident in our ability to build on this strong and highly diversified base.
As I said, this is the bright side. And although our economy is slowly coming out of the recession, our public finances are still reeling from its impact.

I know that in the past, some of my predecessors showered you with rosy scenarios about budgetary projections. I'm not into such games so I'm going to give it to you straight. We believe that in order to build trust, nothing beats the truth.

Early this year, in the budget speech, the previous Quebec government forecast a 4.4 billion dollar deficit in Canadian dollars for this fiscal year. I was skeptical. In the last four years, the actual deficit was always much higher than the forecasted one. This year is no exception.

As far as expenditures are concerned, we have resolutely embarked on a course that should insure that program expenditures as a whole will be exactly in line with what had been announced in the budget speech. Then, next year, they will be frozen at this year's level. This has never been done before.

It is also with respect to revenues that changes are imperative. In fact, shortfalls in revenue represent most of the deficit's increase.

I have asked the Departments of Finance, Revenue, Justice and Public Security to work together to stop the deterioration of the revenue-gathering capacity that has set-in over the last few years.

In that sense, in spite of the present financial results, I see no reason to renounce my objective that we should stop borrowing to pay for the groceries during 1997. Bigger deficits will not be part of our legacy. And, yes, we want to put our financial house in order for the challenges that we are offering Quebeckers.

Already, the more than 450 U.S. corporations that have manufacturing facilities in Quebec know that our corporate tax rate is the lowest in Canada. Our electricity rates are among the lowest in North America. And we have just launched two major initiatives: one to make labor force training a right as important as the right to education; another to streamline business programs offered by the Quebec government, to make it easier and quicker for entrepreneurs and investors to find needed assistance.

Over the years, many Quebec politicians have told you that Quebec is open for business. That is absolutely true. True when the Liberals are in office and true when the Parti québécois is in office. The key word is "open." We, in Quebec, form the community that has most consistently proposed and promoted free-trade on this continent. Without Quebec, there would not have been a majority in Canada for the Canada-U.S. free trade deal. Without Quebec, there would not have been enough support for Canada to enter NAFTA. The sovereignist movement has always been at the forefront of the pro free-trade movement, and still is. Our parliament will be the first, among the provinces, to pass the enabling legislation putting into effect those parts of the NAFTA agreement dealing with provincial jurisdiction. We will also hold a vote favoring the latest GATT agreement.

Obviously, we take as very good news the agreement reached Saturday in Miami at the Summit of the Americas. As you know, President Bill Clinton, Prime Minister Jean Chrétien and 31 other leaders adopted a proposal to complete hemispheric free-trade within 10 years. From Alaska and Quebec to Tierra del Fuego, one vast free-trade zone. According to U.S. officials, this new agreement could match the existing structure of NAFTA.

We are also pushing forward to abolish trade barriers between Canadian provinces. I met with Ontario Premier Bob Rae last month in Toronto. In all truth, he was not tickled pink by some of my political plans. But when I broached the subject of expanding the scope of reciprocity agreements in new areas of government procurement, I got his attention. Last Wednesday, we announced that we would forcefully pursue ongoing Canadian talks to lower other inter-provincial barriers.

Quebec has signed and now manages more than 70 agreements with U.S. states or regions. Likewise since taking office, I have signed two agreements with Chinese provincial governors, and next month, I will resume the practice of yearly meetings between French and Quebec heads of government.

I am pointing these things out to emphasize that we are not only "open for business," but that we mean business when we say we are open.

When you have strong home ownership of your economy; when you export forty percent of everything you produce; when your labor force is skilled enough to get world-class mandates for local GM and IBM plants; when you have a well-educated adult population that is the most bilingual in North America and that has developed strong bonds both with American and European cultures; when your subways, airplanes, songs, plays, circus and cinema are a part of the fabric of international life.... you have no taste for turning inward. You have no desire for closing doors.

You want to open them even wider. You want to step out and be yourself, talk for yourself, deal for yourself, directly, without any intermediary.

In a recent Business Week article, the American Nobel laureate for economics, Gary Becker, used the Quebec example to make the point that this brand of nationalism is "merely riding the crest of world trade to forge new nations."

Which is true, but if world trade now enables smaller nations to prosper in large markets, it is not because we are traders that we want to be sovereign. If so, then California or Alberta could join the fray. No. There is much more: identity, wanting a more defined sense of personality in an increasingly impersonal world. The French writer Paul Claudel once said: "The best thing one can bring to the world is oneself."

A thought echoed a few blocks from here through the halls of the United Nations where dozens of new states have joined the community of nations in the last decades.

When he came to Montreal a couple of years ago, the Secretary General of the United Nations, Mr. Boutros Boutros-Ghali, said something important that, I think, applies to Quebec: "a healthy globalization of modern life," he said, "presupposes solid identities. A world in order," he added, "is a world of independent nations, open to each other in the respect of their differences and of their similarities. It is what I call the fruitful logic of nationalities and universality."

Well, I don't think that anyone who has spent more than a day in Quebec can deny that a healthy nation lives within its borders. A large majority of Quebeckers identify first and foremost with the Quebec government and feel very strongly that most of their own affairs should be managed by what they see as their national government. By what is aptly called their "National Assembly."

For over thirty years, successive Quebec governments have tried to make Canada understand that some accommodation of Quebec's national reality had to be found within the Canadian framework. "Give us some space," was the message. Over the years, it was called "special status," "two nations," the "distinct society," "asymmetrical federalism"... Quebec proposed everything. One of the most dedicated men of Canadian politics, Joe Clark, explained that he once tried to sell the concept of asymmetry but couldn't find a single provincial party leader anywhere in Canada who would support it. That was two years ago.

So to this day, Canada does not recognize the existence of Quebec as a nation, a people, a distinct society or even a somewhat asymmetrical province. On the contrary, the ever stronger consensus in Canada is that every province, including Quebec, should be treated as though there were no difference: only one nation in Canada.

That was not the agreement that Quebeckers entered into when they joined the Canadian confederation. I think I know how Americans feel about their constitution. Here, people "take the fifth," "defend the first" and "uphold the fourth" as though their constitution was a second skin. Well, it has been 12 years now since the Canadian constitution was overhauled without Quebeckers' consent. None of the four Prime Ministers who led Quebec since then has been willing to ratify this document.

Former Canadian Prime Minister Brian Mulroney, a Quebecker, once made this comparison: "This would be," he said, "as if [the American president] revised the U.S. constitution, and it was endorsed then by the governors of all the states except New York, California, Texas and Illinois." That's a powerful image, I know. But that is what has happened. Two attempts at righting that wrong have failed. The very potent national will that has matured in English Canada over the last 20 years now collides on a daily basis with the national will that is at the very heart of Quebec life.

What can or should Americans do about it? Nothing. Absolutely nothing.

Former President George Bush once said the U.S. should "courageously sit on the sidelines" on the Quebec issue. I know it takes courage sometimes to step aside and not get involved. But here is a case where neither Canadians nor Quebeckers would feel that American involvement would be welcome.

I think a Washington Post editorial summed it up best when it said: "Most Americans probably watch this process with some degree of regret, for this country's inclination runs strongly in favor of [Canadian] unity. But American policy needs to remain absolutely neutral. As in certain marriages, differences that have become intractable over the years eventually justify divorce -- and no one outside the family can make that judgment."

Now, we perfectly understand that Americans in general, and the U.S. government in particular, have enjoyed good relations with the Canadian government over the years. As Quebeckers, we'd like to take credit for our share of these good relations. The two Canadian Prime Ministers who promoted free trade with the U.S. in this century both came from Quebec. First Wilfrid Laurier, then Brian Mulroney.

There are many Canadian initiatives that we support and that, as a sovereign country, we would continue pursuing: a new free-trade initiative with Israel, for instance. We have a dynamic Jewish community in Montreal that could profit from such an overture, and already some of our agricultural producers are interested in joint endeavors with Israel. Likewise, our support for Canada's tradition in peacekeeping has been repeatedly affirmed, especially in Parliament by our friends in the sovereignist Bloc Quebecois, who form the official opposition in Ottawa. Since our election in Quebec we are engaged in a great effort to convince Ottawa to review its decision of closing the only military college in Quebec, which has a superb track record. We've made some headway in the last few days.

And let me be clear: we have no scores to settle with Canada or Canadians. We wish them well. We think we'd be better partners as neighbors rather than as a feuding couple. And we don't want our internal debate to lessen in any way the quality of the current relationship enjoyed by Washington and Ottawa. Actually we fully intend - once sovereign - to maintain good relations with both. As I told a large Toronto audience last month, we will be neighbors forever.

When Quebeckers elected us on September 12th, they were told - by us and by our Liberal opponents - that we planned to prepare and offer sovereignty to them in a referendum to be held next year. Our platform called for a declaration, a consultation and a referendum on sovereignty.

Last Tuesday we unveiled the way this would be done. We put a blueprint on the table in the form of a draft bill that Quebeckers will be called, first to discuss and amend, then to adopt or reject in a referendum.

The draft bill explains what sovereignty is: our ability to vote all our laws, manage all our taxes, sign all our treaties. It states our willingness to insure the continuity of laws, permits and regulations during the transition period. It insures that English citizens of Quebec will have greater constitutional protection in a sovereign Quebec than French citizens of Canada currently enjoy. It provides for the right of self-government for the 60,000 Native Quebeckers which we recognize as distinct nations within Quebec. And it foreshadows a regionalization of resources and responsibilities.

It incorporates the referendum question that we are proposing to Quebeckers. It reads as follows: "Are you in favor of the Act passed by the National Assembly declaring the sovereignty of Quebec? Yes or No."

The only remaining key element is the exact date, which we ourselves have not set. It could be spring or fall. It will be in 1995.

And if it is true that our story is one of a couple having reached irreconcilable differences and filing for divorce, then it is clear to us that we have to have joint custody of two of our kids: one is the federal debt and the other, the Canadian dollar.

On the debt, there is no skirting our responsibility in shouldering our share of the burden. The draft bill sets a one-year period following the referendum before full sovereignty comes into effect. During that period, interim measures will have to be set between Canada and Quebec regarding the debt and the assets, while a final settlement of these questions is being negotiated.

In money matters, Quebeckers hold about 110 billion dollars in Canadian currency. They are its co-founders and co-owners of the Canadian dollar. And, as the Toronto CD Howe Institute and many other economists have pointed out, not only is there nothing to stop Quebec from using the dollar, but it is in the best interest of Canada that the currency remain the same. Of course, there is the oft-repeated argument of our role in monetary policy. We'd like to have one. But as things now stand, we haven't been able to get a word in edgewise at the Bank of Canada for decades. So, what else is new?

I'm sure you have many questions and I would like to leave ample time to do them justice. So let me leave you with one thought:

The Quebec issue has been eating at the heart of Canadian politics for decades. Tremendous amounts of time, energy and money have been poured into, and wasted on, an endless debate that has failed to produce a viable resolution within the Canadian framework. It is unproductive, irritating, and has no end in sight. I say it's time to try another tack. I say it's time to stop sidestepping the real issue. I say the best way out of this crisis is to see it through.

Thank you.

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