The Honourable David L. Emerson
Address to e-Commerce to e-Economy:
Strategies for the
September 27, 2004
It’s great to see the quality of the people attending this
I see we have brought together early pioneers as well as today’s heavy
hitters of the e-economy. A testament to the speed of this industry’s
evolution, many of the heavy hitters are also the pioneers.
Ten years ago, we spoke about the “Information Highway” as a bold new
transformative technology. Today, we don’t talk much about “information
highways.” According to Wired magazine, even the word Internet no longer
deserves to be capitalized. The Internet is just another generic class of
infrastructure — like telephones, roads or electricity.
Loss of that capital “I” and the fact that “Internet” is now a
household word is a great credit to many of you and to how far you have
brought us along in a few short years.
I am early in my mandate as Minister of Industry and still haven’t
reached the inflection point on my learning curve. I have been assessing
the broader economic context we face as a country, and I’m trying to
identify and anticipate trends, threats, opportunities and weaknesses. And
I’m trying to define the role that Industry Canada should play in shaping
It is clear that the Government of Canada has done a lot of things
right over the past few years. The books are balanced. Our debt burden is
declining. Consumer and business confidence are in good shape. And we are
seeing consistently strong macroeconomic performance.
Because of our fiscal accomplishments, we have been able to inject new
funds and new life into our health care system — witness the agreement
struck with the provinces earlier this month. We still have work to do,
but we have passed another watershed, and I believe we will see a decade
of innovation and improved health care outcomes as a result.
Looking forward, we’re expecting the economy to do some heavy lifting,
and we have to be sure it remains strong enough to withstand the
In my scan, I see Canada as a relatively small, highly trade-dependent
economy, bobbing along in a turbulent sea of global change — change over
which we have little control. We are, by far, the most trade-dependent
country in the G-7. And since NAFTA, we are
overwhelmingly tied to the U.S. economy.
While our strongest economic ties are within North America, we are also
doing business around the world and are very much part of the globalizing
process that has fundamentally altered our economy and the way we live.
Globalization is leading to corporate consolidations. It’s leading to
global supply chains. And it’s creating new pressures on our global
markets and trade arrangements.
A unified Europe is showing its strength. New technologies and
economies of scale are transforming traditional manufacturing in an Asia
that is becoming a dominant trading area in its own right. Children born
today will graduate into a world where China, not the United States, is
likely to be the largest economy. And information technology is
transforming India much the way it did Singapore over recent decades.
Because of information and communications technologies, the role of
international borders in this globalized economy has changed.
Innovations in transportation and ICT opened the
world. Borders have become less relevant for digital content transactions.
Cyberspace has no border patrols. And knowledge-based products, such as
software, games and music, cross borders with relative ease.
In this borderless world, financial capital travels the world, going to
wherever it can earn the highest return. Human capital is now mobile, and
it’s increasingly behaving like financial capital… following the highest
expected return. As you know all too well, the major assets of
knowledge-based companies walk out the door every night.
These are realities that governments cannot change.
What we can do is create an environment in which Canada gains
advantage, in which we can attract and retain even more graduate students,
researchers, engineers, financial experts and marketing managers. We can
create the climate in which highly qualified people make considered
decisions to build businesses here, to invest their human capital here and
to build a family future here.
To succeed, we’re going to have to deal with border issues and any
impediments to full participation in the global economy from a Canadian
We’ll have to work with our trading partners, especially the United
States, to make it easier for people to cross borders in conducting their
That brings me to the other aspect of globalization. Even though
borders have faded as a barrier to the transmission of ideas and products
of the e-economy, they remain a significant barrier to the free flow of
some goods, services and people.
Think about industries consolidating through mergers and acquisitions,
and corporate nerve centres consolidating in fewer locations — something
many of you have experienced first-hand. With corporate nerve centres
often go research programs, innovation strategies and clusters of
strategic resources and talent that enrich the economies and communities
in which they operate.
Small and medium-sized enterprises are also affected. They may not run
global supply chains, but their customers are likely part of one and they,
too, become part of one.
The policy decisions made by Industry Canada can have a major impact on
how this country fares. Whether our companies are small firms or
transnational giants; whether our research is conducted in government
facilities or in universities and private sector labs; whether we are
talking about the place-of-work and place-of-residence decisions of
CEOs, or our own
children on graduation — Canada’s place in the global economy
10 years from now will depend on policies and actions initiated
We should aim to make Canada a fully ICT-enabled
economy — a world-leading e-economy that will foster growth and wealth
creation across and throughout the country.
We have come a long way in a short time. We can take our place with
pride in being at the forefront of the connected nations of the world. But
we’ll have to work hard to stay ahead of the curve.
We must continue building partnerships for innovation. Our competitive
success depends on our ability to create synergy among industry,
government and the academic community.
Canada’s private sector research and innovation performance has been
weak compared to our international peers. To some degree, we have made up
for the deficiency with a major government-assisted research push in
universities and research institutes. Interesting stories and anecdotes
show up almost daily in the newspapers, but are we getting a systematic,
far-reaching transformation of the economy? I think we have more work to
Business must do its part to build on the partnership potential of
university research and government bodies, such as the Communications
Research Centre, the Canadian Space Agency and the National Research
We need to ensure the scientific and technological advances made
possible by university and government research find their way into the
private sector. We need to ensure that the benefits of innovation
translate into improved competitiveness and productivity, and we need to
ensure that new technologies are broadly disseminated throughout the
Whether the research is done in government labs, in publicly funded
institutions or in universities, it is essential that research outcomes do
not remain trapped beyond reach of private sector enterprises that can
commercialize them and deliver broad-based benefits for Canadians.
That may require changes to how we fund research, but it will almost
certainly require better ways to harvest and commercialize the great
advances that scientists and technologists are making. We believe venture
capital markets in Canada are too thin, and improvements are needed.
Budget 2004 provides for $270 million to be directed toward
increased venture capital funding.
Ideally, our universities would produce a Research In Motion-type
success story every year for the next five years. Realistically, the
intersection of graduate research, capital financing and a willing market
isn’t that easy, and it’s clearly not automatic. We will need to help fund
key enabling technologies, such as nanotechnology, microelectronics,
genetics and biotechnology. We’ll need information linkages between
publicly funded research initiatives. We will need a growing population of
knowledge-based companies that will specialize in commercialization of
science and technology.
While some Canadian firms are global leaders in the generation and
production of ICT, too many
Canadian firms, mostly in the small and medium-sized enterprise sector,
have been slow to adopt powerful new technologies. More evidence of this
came in the recent report of the Canadian e-Business Initiative.
This has negative implications for Canadian competitiveness. We need to
assess how we can accelerate technological adaptation by the growing
number of firms in the SME category. Tax
incentives and/or lower taxes may have a role to play here, as the report
And we must help ensure that businesses, both large and small, as well
as institutions, such as schools and libraries, and individuals in every
corner of Canada are also agents of knowledge and technology dispersion.
They need access to an e-economy infrastructure that takes down barriers
and connects them to global opportunities, and that infuses technology
into virtually all aspects of their social and economic life.
But government has another key role to play in supporting economic
transformation, and that is our role as regulator. Our regulatory
framework will affect our ability to attract investment, and it will
affect the confidence consumers must have if they are to buy and take full
advantage of e-economy products.
The most recent example of the power of regulation to affect the future
was before us today, as the CRTC
concluded hearings into voice-over-IP.
We need to protect intellectual capital and come to grips with the
impact instant copying and transmission has on the creators of knowledge
We need to ensure that our approach to regulating industry and markets
reinforces the development of an economy built on technological
leadership, a strong base of human capital and environmental
responsibility. We need to modernize the regulatory regime to produce the
least economic drag and disruption, while still protecting the health and
safety of Canadians and the environment.
This means government working with industry to eliminate uncertainty
and to allow orderly forward planning and investment by the private
sector. We must make clear, timely decisions on issues such as foreign
ownership. Governments must also work together to eliminate duplication
and regulatory conflict.
We continue to promote non-interventionary regulations. One example is
the new marketplace rules for protecting privacy through the Personal
Information Protection and Electronic Documents Act. The Act is based
on a voluntary code worked out between government, consumers and
We have also developed a Canadian Code of Practice for Consumer
Protection in Electronic Commerce, or the OCA Electronic Commerce
Guidelines. Here again, the intent is to protect consumers while
facilitating the e-economy marketplace in a non-intrusive way.
The Code was endorsed last January by governments across Canada. It
addresses issues such as security, privacy and dispute resolution.
Another threat to the realization of e-economy potential is spam… the
cancer of the e-economy. A few years ago, spam was a mild irritant. Today,
it is a public nuisance, an impediment to business, an invasion of privacy
and a threat to our networked infrastructure.
So far, we have not found a silver bullet, and it is unlikely we will
find one decisive solution to spam. That’s why the government’s Spam Task
Force draws on expertise from all sectors. If we combine the right
legislation, the right enforcement, the right technology and the right
education programs, we may get spam under control. Frankly, we must
succeed or risk a backlash against the very tools that will drive our
future competitive success.
Regulatory improvements are going to have to reach well beyond Canada.
Better cooperation and coordination with regulators in other countries,
where the public policy imperative is essentially the same, is essential.
Bilateral, regional and multilateral trade agreements covering ICT goods and
services are deepening. As a country, we will continue to adhere to the
primary trade agreements under the World Trade Organization. The WTO is a powerful force for
establishing key principles that will guide our trading relationship with
all WTO member
Recently, I have been saying that Canada needs to shockproof itself
competitively. We have to build a competitive edge, a margin of safety. We
have to be the best.
That is why we are engaged at Industry Canada in a strategic rethink.
We are asking ourselves where we want to see the Canadian economy
10 years from now, and what policy levers can be best applied to get
The focus must be on larger, more fundamental themes, where research
and innovation, unleashed in large part by the private sector, but
nurtured by good public policy, can lead to transformative change — much
of it unknown and unpredictable from where we sit today.
It means ensuring that our human capital base is constantly renewed and
upgraded. It means investment in networks and linkages, so that teams of
experts across Canada and internationally are efficiently exchanging
information and coordinating their efforts.
It means having a world-leading capability to pull new scientific
developments out of the “institutional traps,” where they too often get
stuck. We will need a large population of enterprises, with the knowledge
and capital necessary to identify the scientific and technological
advances being made daily across this country, and to turn them into
commercial success stories. Great science is only a first step if we are
to reward Canadians for the investments they are making. Great science
must infuse the economy and drive better living standards for all.
There will be scientific dead ends. But there will be the occasional
home run. We must be ready to hit those home runs for Canada.
We must put Canada on a robust trajectory of prosperity for the next
In my short time as Minister of Industry, I have explored the tangled,
complex web of departments, players and interests. To affect change here
requires patience, persistence and consistent commitment to a distant
beacon. But a few degrees of change can produce a wide turn if you sustain
it long enough.
That is our goal. That is our commitment.
Thank you very much.