(Washington) Federal Finance Minister Chrystia Freeland warns of the dangers of a global “race to the bottom” as government spending fuels the growth of the new green economy.
Freeland made the “polite reminder” on Wednesday during a speech hosted by the Peterson Institute for International Economics in Washington.
The Minister of Finance and Deputy Prime Minister of Canada is in the American capital for the annual meetings of the World Bank and the International Monetary Fund.
She first praised the Biden administration and the Inflation Reduction Act, the controversial new law that provides more than $369 billion in climate spending. It is a “historic and transformative” bill that will “change the world for the better,” Ms. Freeland said.
The importance of the United States’ participation in the fight against climate change, just six years after former President Donald Trump’s decision to abandon the Paris agreement, cannot be overstated, she said. added.
“It’s good for the United States, it’s good for Canada, and it’s good for the world,” said the Deputy Prime Minister.
But she acknowledged that the US approach to launching a climate-friendly economy — “the most significant transformation since the Industrial Revolution,” she said — has caused consternation in some parts of the world.
European leaders, including French President Emmanuel Macron, say the bill gives North American manufacturers an unfair advantage, along with other incentives that competing countries may feel pressured to match.
Therein lies the danger, Ms. Freeland said Wednesday.
Freeland warned that past efforts to promote investment and spur economic growth have ended up lowering corporate tax rates. The danger is that this will weaken national tax revenues, essential to the health of the middle class.
Engaging in a subsidy war would risk leading to “mutually sabotaging competition” that would not benefit anyone in the long run, she said.
“A corporate subsidy war might benefit some shareholders, but it would deplete our national treasuries and weaken the social safety nets that are the foundation of effective democracies,” Freeland said.
“It is in our collective interest, as friends, partners and allies, to work together to ensure that our incentives drive innovation and investment, rather than create a vicious spiral. »
Ms. Freeland also urged her audience in Washington to see free and fair trade as an engine of growth, provided the working class is not left out and it does not automatically send manufacturing jobs to the lowest international bidder or to enrich companies at the expense of workers.
“Workers in Canada, the United States and democracies around the world have long realized that they are drawing near to the straw in competition with the voiceless proletariat in the factories of authoritarian economies,” she said. .
We must do everything in our power to level the playing field for our people.
Nor can any country do it all alone, Ms. Freeland added.
“Ultimately, we all seek to build clean economies that protect workers. We must never forget that, when done right, free and fair trade can help us achieve this goal. »
Ms. Freeland used Russia’s war in Ukraine as a cautionary tale, demonstrating the dangers of assuming that mutual economic benefits would serve as a safeguard against future aggression.
Russian President Vladimir Putin “clarified a lesson that China has also been trying to teach us for years: economic security is an urgent national security issue.”
Hence the importance of “friendshoring”, a term used by the United States Secretary of the Treasury, Janet Yellen, to strengthen essential supply chains by strengthening economic and commercial ties with reliable and like-minded allies. ideas.
Ms. Freeland also took the opportunity to come to the defense of Evan Gershkovich, the Wall Street Journal reporter detained last month in Russia on spying allegations that the United States and the newspaper say are obviously false.
“Personally, as a former journalist, I am very, very concerned about the arrest of Evan Gershkovich. I think everyone should be,” she said.
When Canada faced the prolonged arbitrary detention of Michael Kovrig and Michael Spavor by China, it was essential to have the support of other countries around the world, including the United States, she added. .
“So I think it’s really, really important that we all urgently call for Evan’s release. He crosses that line, which should be incredibly untouchable, which is the freedom to work for journalists.”
