Tiff Macklem: Rewired, recast and redirected - global trade and implications for Canada

Remarks by Mr Tiff Macklem, Governor of the Bank of Canada, at the Canada-UK Chamber of Commerce, London, United Kingdom, 10 September 2024.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

The last time a Bank of Canada governor spoke to the Canada-UK Chamber of Commerce it was 2018. My predecessor, Stephen Poloz, spoke to you about low global interest rates, the steady reduction of inflation risks and the successful conclusion of the North American trade negotiations. Brexit was in motion but not yet a reality.

How the world has changed in just six years.

The pandemic, Russia's unprovoked invasion of Ukraine, and a global battle against inflation have altered the economic landscape. Concerns about national and economic security are changing trade, investment, and business decisions. Accelerating digitalization, particularly artificial intelligence (AI), is creating new competition for economic power. Geopolitical tensions are shifting economic relationships, and industrial policy is making a comeback.

In my time with you today, I'll talk about how trade is changing in response to these forces, both globally and for Canada. I'll also discuss what international financial institutions and the Bank of Canada can do to safeguard stability and prosperity as the global economy shifts beneath our feet. While there are many uncertainties, one thing looks clear: international trade will be different in the years ahead. Canada needs to be ready for the opportunities and the disruptions.

The benefits of open trade

As World War II was ending, allied nations created the Bretton Woods institutions-the International Monetary Fund (IMF), the World Bank and what would eventually become the World Trade Organization (WTO). They wanted to avoid the protectionism and instability of the Great Depression. And they believed economic cooperation, including open trade, was the best way to sustain peace and build prosperity.