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Financial Post, Weekly edition, Mon 12 Feb 90, page 14. Editorial.


Challenges of new economic order

Once again at Davos, Switzerland, last week a strong contingent of Canadian corporate leaders made their presence felt at the annual World Economic Forum. Also participating were federal and provincial politicians and officials, including the premiers of British Columbia and Quebec.

The theme of this year's meeting - ''Competition and Co-operation in a Decade of Turbulence'' - was appropriate as our major companies demonstrate a growing confidence to compete in global markets and as our governments grope with the need to be wiser about what it takes to create the right climate for growth.

?UFleft?Tough world

out there The relentless integration of the world's economies has indeed triggered a deep restructuring of Canada's corporate landscape. Its sweep now reaches into all industries, all sectors. New strategic alliances are being formed, with international partners.

Business backing for the historic Canada-U.S. free trade agreement remains extensive, and rightly so. The need for this kind of outward orientation on the part of Canadian business was reinforced time and again in the Davos sessions.

The drive toward more liberalized market economies is seen most dramatically in the startling developments in Eastern and Central Europe. The economic and financial integration of Europe won't be smooth but it is clear the momentum is unstoppable now. And the deregulation of national businesses is spreading globally.

For Canada, the message should be obvious. In the face of accelerating worldwide integration and widening global markets, our top management must be determinedly expansionist and our politicians far less interventionist. (There were, for example, concerns voiced at Davos over Canada's rising tax burdens generally, and more specifically, Ontario's continued regulatory and tax bites on business.)

Governments must give business the room in which to invest and expand. That means working closer together at this historic turning point in the world's economic order. Inward-looking policies will ensure we are left behind.

For government, the challenge of the 1990s will be how to respond to the pressures to maintain national autonomy and cultural sovereignty, and at the same time allow and encourage our businesses to compete efficiently for trade and investment in a rapidly changing world.

As governments scramble to catch up with the reality of integration across national borders, the most constructive step we could initiate in Canada would be a concerted effort to get on with dismantling provincial barriers to internal trade. A myriad of stifling trade and investment barriers still exist within our own borders. The forces driving the single-market concept of Europe 1992 should tell us something about the direction we should be going in.

With the free trade agreement in place, a top priority for the early 1990s should be to break down our internal barriers to trade.

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Revised: June 3, 1995

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