Episode 41: In this special episode of This Global Trade Adventure recorded live at WTCKY World Trade Day, hosts Steve Marks and Parashar Joshi sit down with distinguished statesman Jean Charest, former Deputy Prime Minister of Canada and former Premier of Québec. Charest shares an insider's perspective on the deeply integrated commercial relationship between the United States and Canada, highlighting that Kentucky alone exports over $8 billion annually to Canada, generating a $4 billion trade surplus. Discover the surprising mechanics of cross-border supply chains, where 70% of Canadian exports to the U.S. consist of essential raw materials or manufacturing components built into final products. The conversation explores high-growth opportunities for American suppliers, including Canada's massive expansion in national defense spending and joint investments in critical minerals. Charest also tackles current tariff disputes, outlining pragmatic steps to ease trade friction and return iconic products like Kentucky bourbon to Canadian retail shelves. Additionally, Commonwealth business leaders will learn how to access dedicated export assistance through the Canadian Consulate in Detroit. Tune in to see why, despite political news and policy shifts, these two nations remain indispensable economic partners and each other's most important customers.
Episode Transcript:
Steve Marks:
Good morning. I am Steve Marks and I head up supply chain and procurement for Givaudan Sense Color and also am the acting chair of the World Trade Center Kentucky. Happy to be here this morning with my good colleague, Parashar Joshi.
Parashar Joshi:
Yes, good morning. My name is Parashar Joshi. I'm the CEO and founder of JIO, Joshi International Operations, formerly Valvoline as well as Amium. And today we're here on this Global Trade Adventure podcast around two for us with a very, very amazing person, Jean Charest.
Jean Charest:
Please flatter me because it works.
Parashar Joshi:
Absolutely.
Jean Charest:
Thanks Parashar. Delighted to join you.
Parashar Joshi:
We're so happy to have you here. We would love for you to just start up and tell us a little bit about your current job and your past roles, because I think people need to know the breadth of experience you already have and how this is... We're going to get into conversation.
Jean Charest:
And I've been around for a while. I had a 30-year career in Canadian politics, half of it at the national level, federal, half of it in Québec politics. I was Premier of Québec for three mandates, close to 10 years. And then I was a Federal Minister, Deputy Prime Minister of the country when I was in federal politics. And I'm a lawyer by training and working for a law firm now, one of the big law firms in the province of Québec. I'm on Prime Minister Carney's advisory council on Canada-US relations. I co-chair. I do a whole host of stuff, boards and different things, but I've been involved in public policy for most of my life.
Parashar Joshi:
So, retirement is nowhere in your path, at this point?
Jean Charest:
No, I'm not going anywhere and my wife doesn't want me to retire.
Steve Marks:
Could you explain very briefly the role of the Premier in government?
Jean Charest:
The equivalent here in the United States would be like a governor. You have a federal system like we do, central government, states. We have provinces, 10 of them, and we have territories also. The difference I would say between your federal system and ours, and it's a British parliamentary system, the provinces have probably more powers where they have a say over natural resources, full taxation power. It's a different system, similar but different. And you have a system of Republican government check and balances executive. We're a British parliamentary system, so it's a different dynamic, but a lot of similarities. I mean, a lot of things that are similar.
Steve Marks:
Perfect. Excellent. It's interesting. We had planned these podcasts, video podcasts several weeks. We've been working on them for a while. So we've kind of came up with a list of general questions for some of our guests. And I think it's very interesting. The first question that we had for you, Jean, was very coincidentally, the United States and Canada have one of the world's closest commercial relationships. How would you characterize that relationship today?
The Status of Our Current US-Canada Relationship
Jean Charest:
Well, and as we are speaking for those who are listening, we're right in the midst of this trade battle between both countries. So new tariffs imposed on Canada, Canada posts tariffs on the United States. Honestly, none of it good for anyone anywhere. So it's not right now and it's a more difficult period, but all of that is relative, Steve, as you know. The reality is that Canada and the United States are each other's biggest customers. We're your biggest customer in everything you buy. The state of Kentucky's a good example. You export to Canada about $8 billion plus worth of product and you import $4 billion. So you have a surplus. But what the real thing is the economy is how integrated we are, and that is exceptional. The United States is not as integrated with either Japan or South Korea or Europe, but with Canada, our supply chains are very, very integrated.
So 70% of what Canada sells to the United States is either raw materials or components that go into the parts of the assembly of products to the point where 25% of what we export to the United States is from the United States.
Parashar Joshi:
That's crazy, right?
Jean Charest:
It is.
Parashar Joshi:
And it's unknown to a lot of people, right?
Jean Charest:
No. So I'll give you an example of lumber. I was at a lumber plant in New Brunswick, close to the border of Vermont, right across the river. And we used to, until recently, there'd be an exemption on softwood lumber. The lumber that comes into the plant comes from the state of Maine. We make softwood lumber with it, sell it back. It used to be that we would exempt all of that from any form of tariff because it's an American log. Now there's a tariff on it. It doesn't make sense, doesn't it? Now that's how closely related we are to each other. And let me add that on a personal level, the relationship between American people and Canadian people is just exceptional. We get along well, we like each other. And I think a lot of us look at all this trade noise and dispute and are asking our governments to move ahead and fine, let's bring the temperature down, move ahead, get this done.
Parashar Joshi:
And that's the key. I think our cultures, as you said before, now Jean's done a great job at the World Trade Day today, giving a nice keynote speech, which is amazing. And people have come up to me, but there used to be a day when you can pass Canada and US and not even need a passport. I think you've mentioned that. Those days obviously have passed for a lot of reasons from security to other reasons. Do you ever see those kind of days ever coming back?
Jean Charest:
Well, that's a very good question. And I was raised, I'm 68 years old. When I was a boy, we were on a lake in the Eastern townships, called Memphrémagog, that went into the United States. We would boat across. And on the way back, you'd pick up a phone at a place. There wasn't anyone there and say, "I'm reporting back." You did not need a passport. You didn't need ID. Now since 9/11 that changed with new security issues, it's changed. And Parashar, as we look into the future, security's going to be a big part of the trade relationships that all of us are going to have. And what we've learned from COVID, what we've learned from the new world in which we are, the threats that it represents, technology, obvious for all our countries, before we enter into trade relations, we're going to look at security imperatives.
Parashar Joshi:
Absolutely.
Jean Charest:
And so we just have to accept that and deal with it, but that's what has really changed.
Steve Marks:
It's interesting. I experienced some of this myself in my career, but one of our roles here at the World Trade Center is to help businesses export products or set up businesses outside of the US, businesses from Kentucky. Canada with English speaking, geography close, a lot of people underestimate how easy it is to do business across the border in Canada. They don't know what it takes. What sort of regulatory or just business challenges do you see that impact new businesses trying to set up from the US into Canada?
Jean Charest:
Well, these things are often measured, and I'm always a little suspicious when they do that. You don't quite know exactly what they measure, but generally the ease of doing business in Canada ranks very high. Whether it's federal government, provincial municipal governments, as you have here, are going to open arms to investors who come and facilitate them coming in. There may be regulatory issues if you're dealing with certain products like biotech or health. That fine. It's on both sides of the border. And the tax system in Canada for businesses is very interesting right now. We're among the best in the world. We've reduced taxes. Personal income taxes, other story because we have more social programs, but from a business point of view. Now, the advantage in Canada is that we have trade agreements with Europe, we have trade agreements we're negotiating now with India. We have trade agreements South Korea.
We're part of what we call TPPs (Trans-Pacific Partnerships). So you have access to other markets as you can come in. But most of all, Steve, you'll be welcome. And everyone gets it, by the way. You may come and invest in our country to have access, and we expect Canadian companies to come here. This isn't a one-way street. This is the way that this economy in the world works. We're 40 million people in Canada. We invest in absolute numbers, more money into the United States than you in the United States with 300 and almost 40 million people invest in Canada.
Parashar Joshi:
100%. 100%. I agree with you.
Jean Charest:
So it makes sense that we welcome each other.
Strong Opportunities for Canada-Kentucky Relationships
Parashar Joshi:
Yeah, no, I have family that live in Ontario and they say the exact same thing, that the investment that's made by the Canadian people in the US is tremendous for a lot of good reasons. One of the things that I've been on this board for a little more than seven, eight years now, the Canadian-Kentucky relationship is strong. I've known several consulate generals now. Now we have Andrea who's brand new joining the group and being involved. So the Kentucky is always looking for opportunities to grow. So we talked about automotive, we talked about a lot of opportunities. What are the untapped opportunities you see that Kentucky can provide to Canada that you are aware of or you want to learn more about that would be awesome for businesses?
Jean Charest:
This is my first visit to Kentucky and I'm very impressed.
Parashar Joshi:
Welcome.
Jean Charest:
Well, thank you. And I felt welcome. And you have a story to tell. I mean, you are, through the years, an example of how a commonwealth state has reacted to the changes in the world economy, the Toyota story, part of that, how you've transitioned into, and very successful. Now in the case of Canada, as we look to the future, there's areas in which there's going to be very strong growth. One of them is national defense. Canada, and President Trump about defense is right.
Canada was a laggard. We did not invest enough in defense, even though we have a huge Arctic territory. And ever since I was in politics, every American administration said to Canadian governments, "You're not doing enough." And now that's changed. We are going to invest massive amounts of money in defense in a very short period of time, and that'll be an opportunity for American businesses, even if 75% of what we buy now on defense comes from the United States, and we have a policy where we say, "Well, we want to produce 70% of what we buy," which is legitimate. But even at that, I mean, take countries, companies like General Dynamics, you're still going to be an extraordinary part of that 70% that's Canadian because... So that's an example of how opportunities are really going to be out there. Mining, strategic minerals is an area in which there's going to be huge investment.
We've learned from the China episode that that's a choke point. Energy is always very good. Manufacturing, AI, we're very strong on AI and the research. That's also another opportunity.
Steve Marks:
That's fantastic. That's good. Is there any practical assistance or recommendation you would have for a Kentucky company looking to enter Canada, I guess would be?
Jean Charest:
Well, the Canadian government serves Kentucky out of our consulate in Detroit. There are teams on the ground that do this. Provincial governments have representatives. They're very active. Again, I'm from the province of Québec. It's probably one of the provinces that is the most active in financial support for companies that come in, either loans, grants, tax treatment, the whole thing. So the consulate is the best place to go, and you'll find there some very good people. Our trade people are number one, as yours are in the United States, and you'll find a lot of assistance there to be able to come into the country.
Steve Marks:
Excellent.
Hope for the Future between Our Two Nations
Parashar Joshi:
Yeah, I mean, you've heard a lot. I mean, I know you spent maybe a day and a half here in Kentucky. Hopefully you'll get to spend more time in the future. What advice do you have for anybody that's involved that this will get better, that this will improve the relationships that we're seeing right now that's kind of stretched a bit because of policy, because of a lot of things? What can you tell us that makes us feel like, hey, this is only going to get better and not worse as we move forward?
Jean Charest:
Well, we will always be each other's biggest customer. That will not change. And you could have tariffs, not tariffs, geography, that will never change.
Parashar Joshi:
Never change. Yep.
Jean Charest:
So now how do we make it work efficiently? Right now, we're at a low point tension in the relationship, but that's government to government.
Steve Marks:
Absolutely.
Jean Charest:
It’s not you, Steve. It's not you. It's not me. And on both sides of the border, this is Canada, and here we need to bring the temperature down. And if we had to do anything, I think people like the World Trade Center or others have to find opportunities to say their government's fine. We've heard you because we get it. We know there are, but you know what? Tariffing each other and counter tariffs isn't going to work.
Steve Marks:
Good point.
Jean Charest:
Surely you can find a better answer to how we deal with each other. And if we get to that point, we're just going to make the relationship better and more efficient.
Parashar Joshi:
Yeah, and the consumers unfortunately feel the pain more than others, right? And that's the key here. There's things to be done both ways properly and security concerns are there. And you talked a lot about China and how that's moving forward. So I think people need to understand that there's good and a bad both in some of these tariffs we're doing, but also how do we approach that in a more systematic way that builds the relationship and continues to build? Because we need to sell liquor to Canada. Canada needs to consume that liquor. And we love bourbon.
Jean Charest:
This morning, our provinces after Mr. Trump made some statements that were taken very personally by liquor off the shelf. Now, Canadian liquor industry is fighting to get American liquor back on the shelves.
Parashar Joshi:
And we're ready. We're ready to get it back. We're ready to sell. Kentucky's got 11 million barrels sitting to be ready to sell some really good barrel bourbon out there.
Jean Charest:
So that's a very good example of what doesn't make sense that we have to address.
Conclusion
Steve Marks:
Well, listen, we really appreciate your time stopping by today. We know you've had a great keynote this morning and great session yesterday you had with the World Trade Center Board. So really appreciate your influence and your ability.
Jean Charest:
And Kentucky now has a new fan. I'm going to go back to Canada and if there's one thing I'm going to talk a lot about is how Kentucky has led the world and so on.
Parashar Joshi:
Yeah, we would love to have you come back again and visit more of Kentucky than just Louisville because there's a lot to be seen and a lot of opportunities in aerospace and other industries that I think could be beneficial both with our relationship.
Jean Charest:
Thank you.
Steve Marks:
So with that, we'll close this edition of this Global Trade Adventure. Jean, we appreciate again. Thank you for being here.
Parashar Joshi:
Thank you, sir.
Steve Marks:
Look forward to our continued discussions and good partnership.
Jean Charest:
Thank you.
Thank you for listening to today's episode. We hope you enjoyed the conversation. You can find more information on our website at wtcky.org. Be sure to register for the upcoming events. Until next time, from all of us at the World Trade Center Kentucky, and our This Global Trade Adventure podcast, remember, if it involves global business at the World Trade Center Kentucky, we grow trade.
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