A Conversation With Canadian Deputy Prime Minister and Finance Minister Chrystia Freeland

Chrystia Freeland discusses how democracies can stand together to protect their economic interests, preserve peace and prosperity for their citizens, and enhance trade at a time of rising geopolitical tensions.

For those attending virtually, log-in information and instructions on how to participate during the question and answer portion will be provided the evening before the event to those who register. Please note the audio, video, and transcript of this meeting will be posted on the CFR website.

FROMAN: Well, welcome everybody. Thanks for being here. My name is Mike Froman, president the Council, and it’s a distinct pleasure to have old friend, colleague in many, many—who’s worn many, many hats, as a journalist, as a commentator, and, of course, basically running every part of the government at one point or another in Canada. So it’s wonderful to have you here.

FREELAND: It is great to be here. And I will say, like, Mike and I first met when he was the USTR and I was the trade minister. And I was saying to him when I saw him this morning a very sad observation, which is, doesn’t he look fantastic—(laughter)—now that he’s not in government anymore? He looks, like, ten years younger, twenty pounds thinner. And so that is sort of great, but also kind of makes me sad. (Laughter.)

FROMAN: As I said, you know, you stop eating out of vending machines and go to the gym at least once a month, it really makes a—it really makes a big difference.

Well, let’s start. You’re here for the IMF, World Bank meetings. Let’s start with the economy. And on the economy, we look back, U.S. economy has grown by about 11 percent since 2019. Canada’s grown by about 6 percent. Canada used to be, I think, on a per capita GDP sort of slightly richer than Montana, which was our sort of ninth state. Now it’s slightly poorer than Alabama, so our fourth state. What’s going on with the economy? Does Canada have—because, we know, in Europe they’ve got a real productivity issue, a real growth issue. As deputy prime minister, finance minister, how do you think about the economic trajectory that Canada is on? And are there are reforms that the Canada needs to pursue to get back on a higher level of growth?

FREELAND: Yeah. Well, thank you for the question. And what I’m going to start by saying is the Canadian, like, those GDP numbers that Mike cited look great compared to every G-7 country other than the United States. I spent the morning at the G-20 finance ministers and central bankers meeting. And sort of minister after minister said: We’ve recovered from COVID, and things are good, except they’re not as good as in the U.S. So sort of my starting observation is: I know that America has many challenges. And I’m sure you’re all aware of those. 

But as your friend and neighbor, and the economy in the world most closely connected with yours, I kind of want to start by saying you guys are really great. Like you really are. And the performance of the U.S. economy through these challenging times has been exceptional in the whole world. Exceptional, vis-à-vis Canada, but actually in the G-7 in terms of GDP recovery, or GDP today versus pre-COVID, Canada is number two. So we are not—we haven’t had as strong a recovery as the U.S., but we’ve had a stronger recovery than any other G-7 country, apart from you guys. 

Let me then sort of mention a couple of other things, looking under the hood. And then I want to talk about what we’re doing. One other very big difference between the Canadian economy and the U.S. economy is fiscal policy. As you guys may have heard, you have a very significant deficit of around 6 percent of GDP. Ours is lower than 1.5 percent. And that is a very intentional policy of our government. You know, I think it was—it was some—I think it was, like, a French president, or maybe an EU leader who talked about the exorbitant privilege of the U.S. dollar. 

And that is a reality. U.S. fiscal policy seems to be not bound by the rules and constraints that bind other countries. And that is just a reality of fiscal policy constraints that a Canadian finance minister faces that a U.S. administration doesn’t face. What it means for the economy is you guys are pumping in a huge amount of fiscal stimulus into the economy all the time. Do I look with envy at that? Certainly, I do. Do I think to myself, wow, Canada should be running a 6 percent budget deficit, and then we would have the turbocharged growth you guys have? Speaking for Canada, no, I don’t think that. And I don’t think that for a few reasons. 

First of all, I know we do not enjoy the exorbitant privilege of the U.S. dollar. We just have to be a little bit more careful. And we’re already seeing our responsible fiscal policy being rewarded in the bond markets, in the foreign reserve markets. So for instance, what you may not know is the Canadian dollar is now the world’s fifth reserve currency. Pretty big deal. Number one is you guys. Number two is the euro. Number three is the yen. Number four is sterling. And number five is Canada. So when people talk about the renminbi as a global reserve currency, you can say to them, and sound very smart, did you guys know actually the Canadian dollar is a more important reserve currency in the world than the Chinese renminbi? Big deal. And actually, the popularity of the Canadian dollar as a reserve currency has grown very significantly in exactly this COVID period. 

And I think that that is definitely correlated with the fact that, like, we spent a lot of money during COVID—really a lot. And we did it on purpose. We really believed that, you know, we—this was an exogenous recession. You know, Canadian economy, the first couple months of COVID, shrank by 17 percent. That was an exogenous shock. We really did not believe it would be a good thing to allow, like, the economic tissue, the economic muscle of the country to be destroyed. So we gave huge support to individual Canadians. We gave huge support to businesses. That cost a lot of money. Once COVID, once the economic lockdowns were over, once we reopened, we were very aggressive about shutting off all those COVID supports.

As the finance minister who did that, let me tell you, it’s much easier to turn on economic support than it is to turn it off. But we did it. And we brought our deficit down. And we are now on a declining debt-to-GDP ratio track. For a country like Canada that is important. In the short term, it does mean there’s less fiscal stimulus being pumped into the economy every day. I think it puts us on, over the medium term, a sustainable path for a country like Canada. And you don’t just need to believe me. The IMF, the World Economic Outlook that was published at the beginning of this week, forecast that next year in 2025 Canada will have the strongest economic growth in the G-7, including all the G-7 countries. 

And, you know, so far—and I’m knocking on wood here—we have managed this extraordinary COVID recession, deepest recession since the Great Depression, with a soft landing. So inflation in Canada has now been within the Bank of Canada’s target range for nine months in a row. It was 1.6 percent in September. And the Bank of Canada yesterday lowered interest rates for the fourth time. I have been really focused, as finance minister, on creating fiscally supportive conditions that made it possible for inflation to come down and for the bank to lower rates. 

And that has been—I think that’s been a focus of all finance ministers. But it’s been a particular Canadian focus because our mortgage market is very different from yours. I bet most people in this room, if they have a mortgage, have a thirty-year mortgage. If this was a room of Canadians, people who had mortgages would have a five-year mortgage. And that means we have a high degree of sensitivity in households to higher interest rates. It’s been very important to create conditions so rates can come down, so that the people who took out really, really low mortgages when COVID first hit, 2020, five years later, 2025, are not really facing this incredible shock. 

And that is—you know, that’s a concern for me partly because, like, I care about Canadians. I want people to have a good, manageable life. But it’s a macro issue as well. And already, you know, in addition to not having huge—you know, the huge degree of fiscal stimulus in Canada that you have in the United States, Canadian households are also—like, they’re Canadian. So they’re responsible, they’re prudent. We have very—they are. Like, it’s just true. Like—

FROMAN: Nice. They’re really nice. (Laughter.)

FREELAND: No, like—no, like, the banks—like, when I talk to our banks, they’re just, like, Canadians. Like, they will do anything before losing their house. They’re, like, having a Canadian hold a mortgage with your bank, it’s an excellent thing. They will always pay their mortgage. And even through this stressful period, that has turned out to be the case. But it’s had a macro impact because being, like, good Canadians, saving money for the mortgage shock ahead, has meant there’s less money being spent inside the economy. Less domestic demand. So that’s kind of—like, that’s my first part of my answer.

But my second part of my answer—I’ll be very quick for this second part. I don’t want to sound like I don’t care about growth, because growth is, like, the thing for any economy. And we really care about growth. And we want to have, like, obvious thing to say but let me say it, more growth rather than less growth. And we do believe—like, I really believe that a sound macroeconomic framework with fiscally sustainable government policies is the foundation of growth and private sector investment. 

It doesn’t always feel good at the time when you have this fiscal consolidation, but I believe in the medium term that gets rewarded. I’ve already told you about our foreign currency reward. By the way, there’s about a hundred basis point difference between the cost of debt for America and the cost of debt for Canada. So, like, every year Canada saves, you know, 10 (billion dollars) to $12 billion per year by having, I would say, a more fiscally sustainable policy. Our ten-year bonds we sell at a lower rate. So I do think that fiscal sustainability is an important foundation for growth and investment. But you need to do other stuff too. 

And what we have in place is an industrial strategy. I think the IRA has been a great policy. And Canada has an equivalent, which is worth about 5 percent of Canada’s GDP focused on the green industrial transition. Taken together, it’s about $160 billion Canadian. And we’re seeing significant investment come in. We had Dow make its biggest investment in North America just outside Edmonton, around $12 billion. Honda has a huge EV investment just outside Toronto, about $15 billion. Also their biggest North American investment. BHP has a huge potash investment in Saskatchewan, around $7 billion. And actually in 2023, on a per capita basis, Canada had the highest FDI in the G-20. So that is good. It’s important. 

I think AI is really important. Again here, you know, it’s like having a very accomplished sibling. That’s you guys. You guys are great in AI. The world’s number two AI country is China. But the number three AI country is us. And actually, Geoff Hinton, who is my constituent, just won a Nobel Prize in AI. And he is not only the intellectual father of AI, but the father of an amazing AI ecosystem in Canada. I am one of the AI optimists. I see this as a real driver of the productivity that you’re talking about, Mike. I’m a big believer that in Canada we have to really support homegrown AI companies. And we’re doing that. And we have, you know, some great beginnings, a company like Cohere based in Toronto, very, very promising. 

And just, I guess it was Tuesday, we unrolled $300 million to promote AI adoption across the Canadian company—across the Canadian economy. And a final thing I’m going to say on the AI front, then I’ll stop because otherwise Mike will kill me, is you guys need us for your AI revolution because one of the things about AI is it is very, very power hungry. AI demands a huge amount of energy. And the world’s AI leaders I think do not want to be the smokestack industries of the twenty-first century. So there is already—and I think this is only going to grow—a huge demand for clean power and for carbon capture in the world, and especially in North America. Our power grid is already 84 percent clean. Yours is less than 50 percent. And so Canada is a great place to build AI data centers. 

Also, by the way, it’s good to be cold if you’re an AI data center. We have a cold climate. You may have heard. (Laughter.) And I think that is very important for AI and productivity in Canada. But I think that partnership is really important too. You may have heard how technology companies are thinking about nuclear. Canada is a nuclear leader. We have our own nuclear technology. And our power grid is significantly dependent on nuclear. We believe in nuclear. We are planning ourselves to be building more nuclear power. And I have—as finance minister, I pioneered the issuance of green bonds. And in our latest issuance, we included nuclear power as part of our green bond.

FROMAN: There are so many directions we could go in from that, so thank you. Let me take you in one direction. One of the reasons Canada is so accomplished in AI, technology generally, is that you’ve had a really sensible immigration policy. And you’ve been a magnet for talent from all over the world, including talent that might have otherwise wanted to come to the United States but found our immigration policies and processes to be somewhat problematic. What advice would you have for the next administration on immigration policy? How have you managed to keep up the public consensus in support of immigration? And are there stresses to the social services sector or other sectors that you worry about in terms of being able to continue that kind of policy?

FREELAND: I never think it is smart to give advice to other countries. 

FROMAN: I remember you giving me advice all the time.

FREELAND: That was in private! That was in private! That was in private. (Laughter.) Certainly in public—

FROMAN: It may not have been advice. I think they were more instructions. (Laughter.)

FREELAND: Look, a Canadian trade minister and an American USTR have one of, I would say, the most intense relationships in the Canada-U.S. relationship, right? 

FROMAN: I’m going to get there, believe me.

FREELAND: Like, it’s—no because we trade so much, right? Like, we are your largest export market and you are our largest export market. That means there is an intensity.

So, but anyway, like, on immigration, I’m going to speak for Canada. And I’ll start by saying, you know, I really do believe that immigration is important for the Canada of today. It’s important for Canada’s future. It’s important economically. And it’s also important socially. You know, Canada—one of the things that I think Canadians like about our country is the diversity of our country, and the diversity that immigration brings. And it was actually the first prime minister Trudeau, Pierre Trudeau, who pioneered this policy of multiculturalism. We have an official policy of multiculturalism. It was announced in Winnipeg at a meeting of the Ukrainian Canadian Congress. And that’s particularly—more than fifty years ago. It’s particularly meaningful for me, because I’m Ukrainian Canadian. And Ukrainian Canadians were, like, one of the first, like, multicultural communities. 

And the notion that’s the foundation for how we organize Canada is of a mosaic, that multicultural communities are supported by the society in retaining their heritage culture, their heritage language, et cetera. My longsuffering children have always gone to Ukrainian school on Saturday mornings. It’s four hours long. It’s very serious. I’ll tell you actually a sad story. One of the teachers is from Ukraine and came after the war started. And her brother died fighting a few months ago. And she told the kids a couple of weeks ago, you have to study harder and do better, because that’s how you’re going to fight Putin. So talk about a seriousness of the effort. But, like, they’re—so my kids, nonetheless, even though they know they have to fight Putin by learning Ukrainian grammar, but they do complain about it. 

But they have friends who are also going to language classes, like, whether it is Mandarin, or Korean, or Punjabi, or Urdu, or Arabic. So that’s kind of—immigration, I think, and diversity is embraced by Canadians as kind of how we live. And economically I think it’s great. You know, I was just at the G-20 meeting. And one of the things various people were talking about is, wow, demographics. That’s going to be a challenge. I think that the countries that are most successful in the twenty-first century will be the ones that know how to embrace immigration and are feminist. Because if you’re feminist, then I think you have policies where women are prepared to be mothers.

But, Mike, I would be lying to you, and I would never do that, if I didn’t say that we have, you know, experienced some strains from immigration. We had, you know, as with so many things post-COVID, or as part of COVID, you know, when we shut the economy down when COVID first hit, we also shut our borders down. And so the regular flow of immigrants that we had was stopped. And that caused real economic problems. There were real shortages. And so when we opened back up again, there was a surge. And that was exacerbated by, I would say, some not totally ethical operators in higher education who brought in international students and didn’t really give them an education. And that area was uncapped. So for those reasons, we had a real surge of immigration. And it did—it has put some stress on our housing market. It’s put stress particularly on rental prices. It’s put stress on the health care system. 

And so I think the announcement has happened this morning already, our immigration minister this morning announced a lowering—we have—every year we have something called the levels plan where we announce how many people we will be welcoming to Canada. And he announced a lowering of those numbers. It’s still a very significant number, but it is lower in response to those stresses and strains. And I do want to say, though, that one of the very successful elements of our immigration policy in recent years has been a fast-track program for highly skilled immigrants. That remains very much in place. 

You know, talking about these AI companies, one of the things—as we were thinking about adjusting these levels plans, one of the things we were very careful about was to talk to our tech companies and say, do—you know, with this, you know, slightly lower approach we’re taking, are you still going to be able to attract those highly skilled, highly paid immigrants? And they will be.

FROMAN: Let’s talk about the most important issue, which is, of course, trade.

FREELAND: It is. It is.

FROMAN: USMCA: You were deeply involved in the negotiation of it. Next year around this time the review of USMCA is to begin, and—the review/renegotiation. What issues would Canada like to see renegotiated, if any, in USMCA? And what issues are you afraid a Trump or Harris administration might seek to reopen?

FREELAND: OK. Wow. 

FROMAN: And will you ever really reopen—or, open your dairy market?

FREELAND: OK. Oh my God. Like, that’s—like, we’re going to have to be here for, like, ten hours. But I’m going to start by saying something that I think is really significant. Which is, the USMCA, I still call it the new NAFTA, is a real landmark agreement because this was an agreement that was negotiated and supported by Donald Trump and his administration, but it was ratified—and significantly, I would say, improved—by Nancy Pelosi and her House. And for me, that—you know, those are two pretty significant figures in the United States. You know, I would say an iconic Democrat, the Republican candidate in the presidential elections. This is a deal that both of them supported. And I think that is really good for Canada. I think it’s good for the United States. I think it gives us a very strong foundation. 

A second thing I would say about the new NAFTA is embedded in it is something that I think is very important, which is a recognition that trade deals work when they work for working people. And so the labor elements of the new NAFTA for wages in the car sector, that is something that we didn’t have in the previous NAFTA. And I think it is very important for auto workers in the U.S. It is very important for auto workers in Canada. And the nature of trade between countries like Canada and the United States, high-income countries that care about wages for working people, that actually care about a good union wage, a living wage, that have high environmental standards—trading between two countries like ours is fundamentally different from trading with a country that has no labor standards, has no environmental standards, and where wages are much lower. 

So that element of NAFTA, I think, is really, really—of the new NAFTA—is really important to recognize, and I think is an important part of its fit for purpose in the twenty-first century. I mention that because, you know, I think, Mike, that the kind of peak globalization, peak Washington consensus, it could even be, like, you know, peak Council on Foreign Relations sort of traditional view of trade, I think it kind of gave trade a bad name and gave trade deals a bad name for working people. And that’s why I think it’s really important to be clear when we talk to Canadians and when we talk to Americans about how the new NAFTA is a different kind of trade deal. It’s a trade deal where good wage jobs for Americans and Canadians in this core manufacturing sector are fully protected.

In terms of what’s next, obviously you have an election coming up.

FROMAN: So I’ve heard.

FREELAND: As you may have heard. And, you know, it will be important for us to sit down and talk to whoever is the new administration and understand their priorities and share ours. I think we have a strong foundation and a strong understanding, I would say, that Canada has and that I think we share with both of your political parties about the importance of strong, good-paying jobs for middle-class union workers. And that will be the foundation. 

The new element—or, a newer element, maybe two new elements that I think we should be thinking about more, and we’re already doing some thinking on, are energy. I do think there is increasingly a demand for energy overall, and particularly clean energy. And I know that Canada is going to need even more. Our investment tax credits, as part of our green industrial strategy, a big part of them is about producing more clean energy in Canada. I think there is a lot of collaboration we, as countries, can do together. 

We’re already doing a lot. We can do even more. I mentioned nuclear already, but that is an area where already we have great corporate collaboration between Cameco and Westinghouse. And you guys may not know it, but Canada, we produce a huge amount of uranium. And we’re collaborating with you. As nuclear becomes more important, I think it’s kind of great for you guys that your friend and neighbor and military ally happens to be a big producer of uranium. So broadly, the energy space, I think, is important. And we could do more there. 

And another area is critical minerals and metals. These are, I think, increasingly important. They’re important today. Will be more important as we move more into the green transition. They’re absolutely essential for electric vehicles, electric batteries. Right now China has a stranglehold of much of the critical minerals and metals market in the world. Canada has thirty-four of the main critical minerals and metals, basically all of them, including lithium, nickel, cobalt, copper, graphite. And, again, part of our green industrial plan is about encouraging the mining and processing of those critical minerals and metals and rare earths. 

But one problem is that, you know, just as we saw in the past China go in and really try, through an intentional policy of oversupply, to undermine the steel sector, to undermine aluminum production, we’re seeing it in critical minerals and metals. And we’ve observed very specifically, when a Canadian company starts to get going on the production of a critical mineral and metal or of a rare earth, we see the market flooded. And that company cannot operate on market principles. We talk a lot about Australia, which is experiencing the same thing. 

I think there is room for us, within the Five Eyes, within the G-7, and between Canada and the U.S. to really think about a critical minerals and metals partnership that allows, you know, the market democracies, to really find a way to actually mine and process these critical minerals and metals that we need. And the good thing about Canada is we actually love mining. Like, we’re really into it. We’re good at it. We have a real history of mining. We have, I would say, social license to mine. We have the technical skills, both in the engineering and on the financing side. PDAC—I don’t know, are there any mining people here? If there were mining people, you have heard of PDAC. It is, like, the mining festival. It’s the Prospectors & Developers. 

FROMAN: Sounds like fun, wow.

FREELAND: Actually, it is—no, like, look—see, I’m showing my Canadianness. It is. It is, like, the premier global mining event. It is held every year in Toronto. And I think that’s a real area where we can do more together. 

FROMAN: Let’s talk about—let’s talk about Ukraine. You mentioned it’s personal to you. And you’re part of a large—relatively large Ukrainian Canadian community. It’s been very important to Canada’s history. Steve Sestanovich and I were recently in Kyiv. We heard a lot there about their desire for, one, permission to use the weapons we’re providing them for long-range strikes into Russia for military targets. And, two, perhaps even more importantly, the critical question of NATO membership being part of any ultimate solution to the current war. Where does Canada stand on those two issues? And are you urging the Biden administration to be less timid in those areas? And how do you see this ending?

FREELAND: Oh, wow. OK. Another, like, ten-hour question. But I do want to start by really congratulating and saluting the work of the Biden administration on Ukraine. Of course, you know, this is, like, a world-shaking event. It happened when we were all still reeling from COVID and the COVID recession. It happened at a time when I think the Western alliance was quite fragile. And I actually think Putin was counting on two things that didn’t happen. First of all, he thought the Ukrainians would cave immediately. He did not think—he didn’t think, actually, Ukraine existed. And if you think a country doesn’t exist, you don’t think that country will have the will and the capacity to fight back. And he has proven to be colossally wrong in that.

But the second thing is, he didn’t think that the Western alliance was prepared to stand together and stand with Ukraine. And I think that’s his second big miscalculation. He didn’t think Ukraine existed. And I think he still thinks it doesn’t exist. And he also, I think, doesn’t really think democracy is a thing. Like I once had a conversation with Boris Berezovsky. I see Anders Åslund is here. There are some other, like, Russianists. Boris Berezovsky, who’s a Russian oligarch. I actually believe that Boris Berezovsky is the guy who first came up with the term “oligarch.” And I think the term “oligarch” was first published in the Financial Times in a piece that Andrew Gowers and I wrote after interviewing Boris Berezovsky. Don’t know if that’s true, but that’s my theory. Anyway, just to let you know how much of a primal oligarch this guy is.

And I talked to him after he had fled Russia and was in the U.K. And it was such a revealing conversation because he said to me, you know, Chrystia, like, you know, we used to talk a lot in Moscow. And you would talk to me about democracy and rule of law and all this kind of stuff. And I never believed you. I didn’t think it actually existed. Like, he really said this. But he was, like, but now here I am. I’m in the U.K. Tony Blair was still prime minister. And he said, I don’t think Tony Blair wants me to be granted asylum. I think it would be a real problem for him. But Britain is a rule of law country, and a judge is granting me asylum. And he’s, like, I didn’t even think that was possible, to have a society like that. 

So anyway, this is about Putin. I think he is like that. I think he really doesn’t realize that we are actually democracies. And that, as democracies, we’re capable of having actual partnerships, and we’re capable of standing with Ukraine. So I think we need to recognize how amazing that is, how great that is, that our relationship and our support for Ukraine is not the only thing that Putin understands, which is a transactional relationship and a power relationship. Only dominance, only zero sum. We actually, at our best, are able to work together to support our values. OK, so that’s the good stuff. 

What should we be doing now? What does Canada think? Canada has said, and we believe, that Ukraine should be able to use long-range weapons in its prosecution of the war. We are very mindful, though, that Canada is not the decider here. We’re very mindful that this is a conversation that has to happen among allies and with allies and Ukraine. I would also say something for us all to bear in mind. And I hosted a supper last night for Sergii Marchenko, the Ukrainian finance minister, and some other allied finance ministers—other NATO allies. 

Important to remember that the Ukrainians are very capable themselves. They are a society with very, very high technological skills and talents. They have been extraordinary at drone warfare and at producing drones. Actually, the Soviet Union’s SS missiles, many of them, used to be produced in Dnipro in Ukraine. So in addition to the sort of easier, very high-tech manufacturer, they have high-tech weaponry, they do also have a military manufacturing capacity. They are focused on developing their own weapons. And I do think we should recognize that. And we should certainly support Ukraine developing its own weapons to prosecute this war. 

Final thing to say, I think we need to be clear about what it is—what is the outcome that we want here. What is the desirable outcome for Canada, for the United States, for our alliance. And I think that outcome is for Ukraine to win and for Putin to lose. And that outcome is tremendously important for us all. It is important, certainly, for the immediate and long-term security of Europe. You know you don’t want to be Poland. You don’t want to be Latvia. You don’t want to be Lithuania. You don’t want to be Estonia. You don’t want to be Finland in a world where Putin has not lost, because he’ll keep on going. We know that about him. We’ve seen that about him. I think the war in Ukraine actually began with the Russian invasion of Georgia. Maybe it began with the terrible treatment of Chechnya, but it certainly began with the Russian invasion of Georgia. 

So that’s one reason we need it. But the other reason we really need Ukraine to win and Putin to lose is there is this bigger question of democracy versus dictatorship in the world. That is a question in geopolitics, but it’s also a question in our own societies. And, like, democracy, it is very hard. (Laughs.) It’s hard to be a citizen of a democracy. It’s hard to be a government in a democracy. It’s hard to keep—you know, it’s hard to meet the needs of people in a world which is changing a lot. And, given that hardness of democracy, it’s so easy for authoritarianism and dictatorship to be alluring. This idea of a strongman, you know, a bare-chested guy on a horse. It can seem, like, so simple, and less messy, and more clear. And, like, maybe that guy will protect me and take care of me and, like, fight all the other bad guys in the world for me.

I obviously don’t think that, but I really think we cannot understate the extent to which that Ukrainian battlefield is the battlefield of democracy and dictatorship. And, like, we’re so lucky because the Ukrainians turned out to be excellent warriors. Like, they turned out to be very good at fighting. And I think we’re all disappointed that they haven’t won already, but just think about it. The Russian military, which—how much money does the Pentagon—how much money has the Pentagon spent over decades to be prepared to stand up to the Russian military—is actually having a hard time standing up to Ukraine. And they’re fighting there by themselves. 

So I think it is absolutely possible for them to win. And we just need to give them a little more support. They can do it. And that is going to be very important geopolitically, but I also think really important in terms of our own societies and how we think about ourselves, and our capacity—the capacity of democracies in the world. 

FROMAN: I’m going to open it up the questions. Let me ask two final quick questions. One, should Ukraine be allowed into NATO? Yes or no.

FREELAND: Yes. 

FROMAN: And, two, how come Canada is one of the now minority of NATO countries that have not spent 2 percent of GDP on defense? And why is it saying it can’t spend that until 2032?

FREELAND: Well, we are committed to spending it in 2032. When we formed government, Canada was spending 0.9 percent of GDP on defense. And we—like, we’re very Canadian in that we don’t—we want to do things in a careful, responsible way. People here will know, defense procurement can be challenging to do properly and not wastefully. And so we’re committed to doing it in the right way and not the wrong way. Obvious thing to say, but yet profoundly true. 

I also want to say to our American friends here we are a good ally and partner for you, including a good military ally and partner for you. And where it counts, we are stepping up and delivering. Enhanced forward presence, NATO missions, supporting those frontline NATO members, Canada is one of the leaders of a NATO enhanced forward presence mission. We lead the mission in Latvia. And we were one of the four countries that stepped up to lead a NATO enhanced forward presence mission right at the start. It was Canada, the U.S., the U.K. and Germany.

In terms of support for Ukraine, actually Canada has been training Ukrainian troops since 2015, in Ukraine. After the war started, we moved the training, but we knew. Like, when Putin—this is—the full-scale invasion of Ukraine happened in February 2022, it but it started with the invasion of Crimea. And we stepped up then, earlier than many, many other countries, to support Ukraine militarily. As I’ve said, I really believe that the front line is the war between Russia and Ukraine. And I think you guys have been magnificent in supporting Ukraine. We are right up there. We’ve spent nearly $20 billion supporting Ukraine. 

And I think the headline story of this week of the IMF, World Bank meetings will be the G-7 coming together to provide significant support to Ukraine, secured on the assets of the Russian Central Bank. Thank you, Team USA for what you’ve done there. And Canada is really glad to have played a significant role. On a per capita basis we are going to be advancing more money as part of that package than any other country. And, like, that really, really matters. 

And then just my final military things to say to you guys are, we are the seventh-largest spender inside NATO. Please don’t forget our NORAD partnership. This is the only command—this is the only shared command where the U.S. fully shares the command with another country, and Canadian commanders can be put in charge of American soldiers in this command—also vice versa. And we’re investing $40 billion in NORAD defense. We believe very much in the importance of Arctic security. That is a shared perimeter that we have and that we need to protect together. And we’re investing heavily there. 

Part of what we need to do as a country, much more so than you guys, and part of the reason for the scale up, is build up our military industrial complex. The Canadian economy, unlike the U.S. economy, has not been based so much on a military industrial complex. We have strong manufacturing. We have steel. We have aluminum. We believe in building stuff. And one of the things that I’m very excited about is the tripartite effort of Canada, Finland, and the United States to scale up our own icebreaker building capacity. Like, that’s really important. An icebreaker is a complicated thing to make. It’s important. We need more of them. And we’re very excited to be building them together with you.

FROMAN: Terrific. Let’s open it up. 

Yes, Christopher.

Q: Hi. Thank you.

Could you—regardless of the outcome of the election in a couple of weeks, we are headed to a path in the United States to have a higher set of restrictions and tariffs and barriers on our trade with China. What would you—how is Canada looking at that prospect? And how will your approach likely differ from ours?

FREELAND: Maybe less than you think. We—

(Off-side conversation.)

FREELAND: There we go. OK, there we go.

We are—we believe in a strong partnership with the United States economically. That’s the new NAFTA. And we think that developing, in so far as possible, a mutually supportive position vis-à-vis China is really important. And so we announced—I announced in the summer consultations on tariffs on Chinese EVs, consultations on tariffs on Chinese steel and aluminum. The EV tariffs at 100 percent went into force in Canada on October 1. The steel and aluminum tariffs at 25 percent went into force on the 22^nd of October, which I believe was Tuesday. Am I right, Tuesday? Yeah. 

And we did that for two reasons. One, I actually really believe that a reckoning with China’s, you might want to call it, Chinese mercantilism, communist mercantilism, is long overdue. China has had an intentional policy of overcapacity. China’s had an intentional policy—and we know it, because they say it, right, the dual circulation economy. The Chinese economic plan is to make everybody else dependent on China, but to make China dependent only on itself economically. Sounds like we should probably not play ball. And I also think it is really important—you know, I believe we, in Canada, should have a manufacturing economy. And I believe that the green transition is important. I think we need to have high labor standards. I think we need to have high environmental standards.

It’s very hard to tell Canadian workers and Canadian companies that they need to have those standards if they face competition from an economy that has an intentional policy of overcapacity and doesn’t care about labor standards, to put it mildly, or environmental standards. So that’s part one. Part two, like, it is a privilege for Canada to have the economic partnership we have with the United States. And I think it is entirely reasonable for us, in our partnership, to say, you know what? Let’s agree that neither one of our economies is going to be a back door to Chinese oversupply and overcapacity. So that is our approach. We’ve worked very closely with the Biden administration on these measures. And we will work closely with whoever the American people, in your great wisdom, elect in a couple of weeks. (Laughter.) I mean that seriously.

FROMAN: We have about a hundred people online. When we take a virtual question.

OPERATOR: We’ll take the next question from Anatoly Chubays.

FREELAND: No way!

FROMAN: Anatoly is a member of Global Board of Advisors.

Q: My pleasure to see you.

FREELAND: I had no idea!

FROMAN: Good to hear from you, Anatoly.

Q: So nice—so nice to see you again. (Laughs.)

FREELAND: Oh, Anatoly—(speaks in Russian.)

Q: (Speaks in Russian.)

FROMAN: All right, none of that.

FREELAND: OK, anyway. OK. (Laughter.) That’s so nice! I haven’t talked to Anatoly for such a long time! I’m delighted. OK.

Q: Me as well.

So let me introduce myself. I’m a former Russian government official, had to immigrate from Russia because of the war. And now I’m in Israel, founded Russian Study Center in Tel Aviv. And if I may, I wish you personal success, anyway.

And if I may, I would like to come back to the issues of Canadian economic growth. And you mentioned that one of the potential sector for the growth in Canada, that’s power sector, because of AI. And I’m absolutely agree with you that that’s the unique opportunities for Canada, for the growth. But correct me if I wrong, as far as I know, the Canadian power sector is—have quite a limited deregulation program. And still in Canada, you have up to 60 percent of generation under the governmental control. But do you believe that in order to achieve more foreign direct investment, FDI, in Canada in power sector, you would have to think about the more deregulation in the sector, more private property of that sector? What are you understanding of this strategy?

FREELAND: OK, well, first of all, I just want to say, Anatoly, it is so wonderful to hear you. And Anders Åslund is here. And I have to say, I am so sad about the direction Russia has taken. And I do want to say that I think it was not inevitable. There was certainly a time in the ’90s when it was entirely possible for Russia to choose a democratic path. And I think it’s important for us all to remember that. And I hope a day will come when Russia does go back to that path. So I just—I had to say that.

On power generation, Anatoly, like, I’m so impressed and amazed that among the million things you know, you know about the Canadian power sector. (Laughter.) Anatoly is absolutely right that—I mean, Canada is an energy superpower. We basically produce all forms of energy. We have a lot of oil. We have a lot of natural gas. We just finished building a pipeline. And we have a very strong renewables sector. I’ve talked about nuclear. And hydro, of course, is very, very important part of the Canadian power mix. 

Anatoly is right that our principal electricity power companies are publicly owned. They actually are owned principally by provincial governments. A hydro dam, which is a big source of electricity for Canada, those tend to be built by a government. It’s hard for the private sector to dam a vast Canadian river and get the social license to do it, and it’s a huge amount of capital. And big nuclear power plants, hard for the private sector to build those—although maybe not impossible given the big demand.

We are seeing, Anatoly, some increased interest in private sector investment in power generation in Canada. SMRs, small modular reactors, are an area where Canada is doing some pioneering research. We are very enthusiastic about them at the kind of research and government level. And we are seeing some big investors working towards building their own SMRs to provide clean power for big projects, whether it is a big mining project or a big decarbonization project. We really welcome that. 

I am hopeful that the ITC, the investment tax credits, we’ve put in place to support clean electricity, that those will be a real incentive to more private-sector investment in power generation in Canada, there is lots of early interest and enthusiasm. I would love to see even more. And we’re working on some specific projects around data centers as well. But if anyone here is interested in investing in those areas, please know Canada is definitely open for business. 

And, look, I know that in every sort of advanced industrial economy permitting and regulations are a challenge. We have set up in the Privy Council Office a specific unit to kind of provide concierge service for the permitting of big clean energy projects. So if you’re interested, send me an email—that includes you, Anatoly, and we’ll put you in touch with Paul Halucha at the PCO, and you can get going. 

FROMAN: Let’s do one last question here. Yes, Nili.

Q: Thank you. Hi, Nili Gilbert, the vice chair of Carbon Direct, and also chair the advisory board for GFANZ. 

Thank you so much for speaking passionately about Canada as an energy superpower, your very strong industrial base, and at the same time about your green industrial transition goals, and everything that you’re doing in clean energy. I imagine that for Canada, and countries like it that have very resource-driven and export-driven economies, that you see kind of a different climate transition ahead than others might have, because you have one foot strongly rooted in the old industrial economy and are reaching also to the green future. I wonder how you think about managing that balance, from the share of GDP and revenues today that come from traditional energy, as well as when you think about the decentralized government that you have and managing politics across the provinces.

FROMAN: Can I just add to her question? There’s also the issue of indigenous people and indigenous rights. How do you calculate that into this energy strategy?

FREELAND: OK, another, like, ten hours. I’m actually going to start with the indigenous question, because this has been a quiet revolution in Canada and something that I’m very excited about. Our government and our prime minister, when we first formed government in 2015, one of the things the prime minister said was that there was no relationship more important than the relationship with indigenous people in Canada. And that’s—like, it’s a huge—that’s a huge project and a huge historical challenge to overcome. 

What is exciting to me is we are now moving into a conversation about indigenous prosperity and finding ways to include indigenous people in Canada in the development of our country. One aspect of that is a multi-billion dollar loan guarantee program that I announced in the budget, in the most recent budget, and that will provide capital to indigenous people to participate in major infrastructure and economic projects in the country, including natural resource projects. So the future that I foresee for Canada, and it’s already started, is you’re going to see our major pipelines owned to a significant degree by indigenous—the indigenous people whose land they cross. That, to me, is transformational. And it’s transformational socially as well as economically. That’s your indigenous element. 

There was, like, a federal-provincial part of your question. I’m not even going to go there, because it’s very complicated and probably principal of interest to Canadians, some of whom are here. But to the bigger question of kind of, you know, how do you go from being an industrial, resource-based fossil fuel economy to a green economy? I think that’s, like, one of the core questions of our time. And I think, like, we collectively—like, we cannot understate the magnitude of the challenge. The person who actually expressed it most clearly and vividly to me was Olaf Scholz, back when he was, like, a mere finance minister. And we had some gathering of G-7 finance ministers. And he said, this is the biggest industrial transformation since the industrial revolution itself. And, like, think about that for a minute. He’s right. 

Like, I think we all want to still have, like, an industrial economy. I think we all want to kind of keep on living how we’re living. I think we’d like to even, like, live a little better every year, and have our kids live a little better. OK, so we want that industrial economy. But what we’re saying is we have to plug it into a totally different power source. That’s a huge undertaking. And I think the central idea that has to drive that undertaking is we will only be successful if this is not about hairshirts. Like, people in a democracy are not going to sign up to suffering and being made poor. I don’t recommend that to anyone who needs to get elected as a political platform, no matter how virtuous the outcome. 

And so we have to have a plan for that green transition that involves good jobs, that involves a good life. I think that it’s possible, but I think it is really complicated. And that is why I think we need industrial strategies right now. We do need government investment to sort of facilitate that transition. And we need government policies that crowd in private capital. But I think done right, this can be a transition that is, in addition to, you know, protecting the planet, is also about creating good jobs, and prosperity, and good lives for working people. And I think our central focus needs to be ensuring that that is the case, because if that is not the case we will fail.

FROMAN: Those of us who are mere trade ministers are so proud of those who’ve gone on the bigger and better things. (Laughter.) Foreign Minister, Finance Minister, Deputy Prime Minister Freeland thank you so much for joining us and for contributing so much to U.S.-Canadian relations and Canada’s role in the world.

FREELAND: OK. Well, thank you, Mike. I want to say one last thing to you and to the Americans here. Which is, I just want to say to all of you, you are really great. Like, I really mean it. (Laughter.) Like, you are an amazing—no, I mean it, actually, Like, you’re an amazing country. And in so many ways as your neighbor—first of all, you know, we started off talking about you—America’s just, like, phenomenal economic growth and productivity. It’s something we talk about, you know, in my office every day, and things we can learn from you. 

But I also do want to say, you know, the defining geographical fact of Canada’s existence is that you are our neighbor. And though sometimes we have spats, but very broad—you know, at a very high level, the fact that Canada is a prosperous, flourishing democracy is built, very fundamentally, on the fact that we have a prosperous, flourishing neighbor to our south. We have the world’s longest un-militarized border. That’s an amazing accomplishment for two entirely sovereign, separate countries. And I don’t think it happens by accident. And, you know, I know that there are many challenges inside the United States, at least that’s what I’m told when I turn on the TV. But I just do want to say, as a Canadian, I think that we are really lucky to have you as our friend and neighbor and partner. So thanks a lot, guys. (Laughter, applause.)

FROMAN: Thank you.

(END)

This is an uncorrected transcript.