A Primer to the North American Leaders’ Summit (NALS)

Image: SUSAN WALSH / THE ASSOCIATED PRESS

Policy Paper

by Colin Robertson
CGAI Vice-President and Fellow
June, 2016

Foreward
The Program
The NALS Agenda
The Problems
Likely NALS Outcomes
Does NALS Matter?
Could NALS Be More Effective?
USA and Canada
Mexico and Canada
North American Idea
Previous NALS
Canada and the Trans-Pacific Partnership
Canada and the Americas
Further Reading

Foreward

On Wednesday, June 29th, Canadian Prime Minister Justin Trudeau will host US President Barack Obama and Mexican President Enrique Peña Nieto for the tenth North American Leaders’ Summit (NALS).

All three leaders want this meeting to succeed. For President Obama, it will advance his climate agenda continentally and help to cement his legacy in managing good neighbourhood relations. Climate also rates high in President Peña Nieto’s agenda, along with improving access for Mexican goods and mobility for Mexicans within North America. In terms of Canada-Mexico relations, President Peña Nieto expects Prime Minister Trudeau to announce the lifting of the obnoxious Canadian visa requirement.

For Prime Minister Trudeau, making his debut as host of a multilateral summit, it is another demonstration that ‘Canada is back’. He must reset the Mexican relationship by announcing the long-promised lifting of the visa. He will get to know Enrique Peña Nieto better (they met briefly at November’s G20 summit and they were friendly ‘rivals’ for ‘APEC ‘hottie’ at the subsequent Manila summit). The summit represents another opportunity for ‘face-time’ with Barack Obama with whom he has quickly established a strong personal friendship and to reciprocate the hospitality of the White House meetings and state dinner in March.

The North American summit comes within a week of the Brexit referendum. It will offer an opportunity for the three leaders to demonstrate a different kind of continental integration – less centralized, less bureaucratic – but still successful in mutually advancing economic prosperity that reinforces the sovereignty of each member.

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The Program

The meetings inevitably involve a series of dual bilaterals (Canada-Mexico, Canada-USA, USA-Mexico) as well as the trilateral discussion. The program will also involve various meetings with cabinet ministers from all three nations.

President Enrique Peña Nieto, whose state visit begins on June 27 with a welcome by Governor General David Johnston, will have meetings before the summit with Prime Minister Trudeau as well as Premiers Couillard and Wynn during stops in Montreal and Toronto as part of his state visit to Canada.

President Barack Obama’s official visit (he was last in Canada for the G8/20 in June 2010 and before that met with Prime Minister Harper in Ottawa in February 2009) begins with his arrival on Wednesday morning from Washington for the NALS. Later in the day he will address the Canadian Parliament.

The Canada-US files got a thorough discussion during the March 10-11 visit to Washington by Prime Minister Trudeau. The visit concluded with a series of announceables on climate, energy, the Arctic, and pre-clearance for rail in Montreal and Vancouver and airports in Quebec City and Toronto (Billy Bishop). The leaders agreed to reciprocal sharing of no-fly lists and entry-exit information. These discussions will be referenced and expanded on during this visit.

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The NALS Agenda

The meetings, that will also include senior ministers, will cover five baskets of issues:

Climate, Energy, and the Environment: building on the ongoing work of the Energy Ministers and longstanding cooperation on environmental issues, including, for example, migratory species and the use of pesticides. There has been a great deal of environment related-collaboration on a Canada-USA (through, for example, the International Joint Commission) and Mexico-USA basis (through, for example, the existing North American Development Bank of which Canada is currently not a member) as well as multilateral cooperation through the UN climate change conferences culminating in December’s Paris agreement. The Ottawa meetings are an opportunity to develop a higher-standard North American consensus on issues such as methane emissions (both Canada and the USA agreed to align methane emission standards during the March summit), water use, energy efficiency standards, as well as pursue cooperative efforts on the development of low carbon technologies.
Competitiveness and Trade: building on the competitiveness workplan developed by the trade ministers. Again, there is a good amount of collaboration bilaterally, i.e. Canada-USA (through, for example, the Beyond-the-Border initiatives and Regulatory Cooperation Council) and Mexico-USA (through, for example, the Regulatory Cooperation Council and Hi-Level Economic Dialogue established in 2013). Discussions will also include the Trans-Pacific Partnership, an Obama administration priority, as the three nations’ negotiate to establish or update their trade agreements with the EU and trade with the rest of the Americas. There is also an effort to find convergence in the ongoing bilateral (i.e. Mexico-USA and Canada-USA) regulatory cooperation exercises and to develop a trilateral approach to the economic empowerment of women.

The George W. Bush Institute has produced a handy international competitiveness scorecard that ranks North America ahead of all other world trading blocs. To further improve our relative position the Bush Institute argues that the USA needs to improve its fiscal responsibility, reduce its relative indebtedness and restore confidence in its long-term macroeconomic outlook. Mexico needs to improve the rule of law and reduce corruption. Canada lags in innovation, technology transfer and regulatory reform.
The Border: Everyday $3.3 billion USD worth of goods moves between the US, Canada and Mexico underlining the need for a coordinated approach to the efficiency of border crossings. More than 80 percent of goods go by land with trucks accounting for three-fifths of the volume. Nearly two million tons of goods move by truck across the borders each day and 10.5 million container crossings by truck or rail take place each year.

Continental trade is increasingly a case of making things together (25PC of what Canada exports to the USA was sourced from the USA while 40PC of what Mexico sells to the USA was sourced in the USA). Efforts to improve our competitiveness are mostly bilateral in focus, i.e. the Canada-USA Beyond-the-Border initiative and USA-Mexico border program.

Security at the border has been a special focus of US administrations, and in the wake of the March summit, Canada has introduced legislation (June 15) to permit collection of “routine biographic information on all travellers exiting Canada”.

All three nations are looking to improve their interconnectivity and renovate their infrastructure. The American Society of Civil Engineers warns that a $3.6 trillion investment in US infrastructure is needed by 2020. Better coordination in the renovating and rebuilding of our infrastructure - roads and rail, ports and airports, grids and pipelines – makes sense. Why not, for example, a North American Infrastructure Development Bank?
North American Issues: related to cyber security, pandemics (e.g. Zika virus), disaster management (e.g. fires, floods, tornados, and hurricanes); invasive species (e.g. mussels); and criminal activities. There are also challenges within the Americas, for example, Central America and cooperation around drug and people trafficking, reconstruction in Haiti and Colombia, the ongoing crisis in Venezuela and the aftermath of the recent OAS meeting, and Brazil and its political and economic situation in the lead-up to this year’s Olympics.
Global Issues: including the aftermath of the Brexit vote; global trade and the Trans-Pacific Partnership involving all three nations; terrorism, at home and abroad; and the G20 summit that China hosts this fall.

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The Problems

The Mexican Visa: Expect Prime Minister Trudeau to announce the lifting of the visa requirement imposed on Mexico in July 2009 when Mexican refugee claimants surged. Subsequent legislation by the Harper Government closed loopholes in our refugee claimant system and in 2012 Mexico was placed on the list of countries considered safe and therefore unlikely to produce valid refugee claimants, although some human rights groups contest whether Mexico is ‘safe’. The Liberal Government is now re-examining the designated safe country-of-origin system.

Justin Trudeau promised to lift the Mexican visa while in opposition and included it in the mandate letter. Its continued imposition has deeply irritated the Mexicans and, as former Mexican Ambassador Francisco Suárez recently pointed out, stalled Mexican trade and investment in Canada as well as the flow of tourism and students. Mexico will likely be included in the first batch of countries eligible for the promised, but much delayed, Electronic Travel Authorization (ETA) system that will apply to our leading trade partners.
Softwood Lumber: There is no ‘free trade’ in lumber but rather managed trade subject to carefully negotiated access. The 100 days given during the Washington summit to US Trade Representative Michael Froman and Canadian Trade Minister Chrystia Freeland to “intensely explore all options” will have expired and “significant differences remain”. An embarrassment for the Trudeau government, the US side will point out that it is for the Canadians to get their act together, but a nudge from the White House to industry would be helpful as the USTR is perhaps the most Canada-unfriendly US agency. Leaving it to them is a recipe for long litigation and confiscatory levies.

Softwood lumber or ‘timber’ as it is called in the USA is the Freddy Krueger of trade irritants. The first lumber dispute dates back to the second George Washington administration. Within Canada, there are differing regional (Maritimes vs Ontario and Quebec vs Alberta vs British Columbia, intra-provincial (within British Columbia) and industry positions.
Renewed Threat of US Protectionism: Both Prime Minister Trudeau and President Peña Nieto will want President Obama’s advice and insight into the presidential election and its aftermath. Both Hillary Clinton (whom President Obama has endorsed) and Donald Trump have voiced their opposition to the Trans-Pacific Partnership as well as NAFTA. Donald Trump has consistently dissed Mexico and Mexicans acknowledging while “some, I assume, are good people”, they include “rapists” and bring drugs and crime. Building a wall along the Mexican border is a stock part of his campaign repertoire. He said he would permit the XL pipeline but only if the USA “gets a piece of the profits”. While a Pew Foundation survey (January 2016) showed trade to be last of 18 options in their top priorities, in March a Patrick Caddell survey showed that both Republican and Democrat primary voters said trade deals benefited “other countries” more than the US.

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Likely NALS Outcomes

The governments will frame their meeting as a celebration of neighbourliness, a North American ‘green summit’ with continuing progress on improving North American competitiveness.

Climate: Look for announceables related to joint research projects, alignment of emission standards and complementary regulatory approaches on issues including: low-carbon electricity; clean energy technologies; energy efficiency; carbon capture, use and storage; climate change adaptation; electric vehicles and reducing emissions from the oil and gas sector, including from methane and black carbon. Each of these items was discussed in Winnipeg (February) and in San Francisco (June) by the energy ministers – Jim Carr (Canada), Ernest Moniz (USA) and Pedro Joaquín Coldwell (Mexico).

Significant work has gone into mapping North American energy trade and infrastructure and this should make for better future investments. Earlier this month, the energy ministers launched the North American Renewable Integration Study to better understand the planning and operational impacts of integrating growing renewable energy sources, such as solar, hydro and wind, into our electricity grids. The ministers also agreed to recruit companies to implement the ISO 50001 standard to improve energy efficiency and to support the CEM Clean Energy Solutions Center.

Over $167 billion CAD worth of energy products were traded between North America in 2015. Canada, the United States and Mexico are members of the 20 nation Mission Innovation imitative signed in Paris (November 2015). Members committed to doubling their investments in clean energy research and development over five years and the energy ministers reiterated this commitment in San Francisco. The Trudeau government promised to invest an additional $300 million CAD a year in clean technology.

There is also enormous potential in coordinated research and development and innovation. North America can be the testing ground for lower carbon technologies that eventually can assist other countries to meet their emissions reduction objectives. Carbon pricing is important but it is not the only weapon in the carbon reduction armory. Cost-effective regulation can also produce gains, provided that national, state and local regulations do not create unnecessary barriers but rather lead to effective coordination.
Trade and the Borders: Look for announceables drawing from the competitiveness workplan of the trade ministers – Chrystia Freeland (Canada), Penny Pritzker (USA), and Ildefonso Guajardo (Mexico) who met in Washington in May. They endorsed fourteen initiatives to improve supply chain efficiency, enhance innovation and economic development, and stakeholder engagement. Specifically, their workplan looks at trusted travellers; common standards; single window border facilitation; trade measurement and cluster asset mapping; clean energy initiatives; internationalizing SMEs; connecting with local governments; exchange on innovation and entrepreneurship; patent protection; cyber security; public-private collaboration; and communications. The test for each of these initiatives will be in their practical implementation and then application to advance trade and investment and how they benefit business and travelers.
Canada and Mexico would both like to expand the list of professionals included in the NAFTA visa category but the USA is not likely to concur, arguing that it requires congressional approval and that Congress is in no mood to liberalize immigration.
Geo-Strategic Collaboration: Look for announceables around greater collaboration on regional and global issues and enhancing security cooperation. This will draw from the Foreign Ministers – Stéphane Dion (Canada), John Kerry (USA), and Claudia Ruiz Massieu (Mexico) who met in Quebec (January) to discuss cooperation on climate change, clean energy and the environment, security cooperation and improving North American competitiveness.
For example, President Obama hosted a summit last year on peace operations and while neither Canada nor Mexico participated, both are now looking at potential participation in a Colombian mission. Prime Minister Trudeau promised “to renew Canada’s commitment to United Nations peacekeeping operations” in December’s Throne Speech.

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Does NALS Matter?

Having a regular leaders’ sit-down with our continental neighbours makes a lot of sense. Almost 80 PC of Canadian exports are destined to our NAFTA partners. Trade between Canada and the United States more than doubled since the signature of the NAFTA in 1993, with trade between Canada and Mexico increasing over seven-fold.

Neighbourhood matters, not just for the economics of increasingly shared supply chain trade and continental positioning vis-a-vis Asia and Europe, but because of the perils of climate change and pandemics given our shared geography.

With the upcoming change in the US Administration, this is one of the last opportunities to insulate ourselves through ongoing collaboration with an Obama Administration that is working on all cylinders until January 20, 2017 when the new Administration takes office.

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Could NALS Be More Effective?

Greater continuity in schedule and agenda would benefit NALS. Unlike other major summits – the UN and its agencies, the Commonwealth and the Francophonie - the NALS lacks a permanent office. The organization of NALS depends on the host nation. It would benefit from the practice of the G8/20 which employs permanent Sherpas to provide continuity of agenda and historical memory. The NALS should consider a fixed date for meetings. It could also take a page from the Pacific Alliance which holds virtual summits using tele-technology.

NALS has developed an effective and more regular series of ministerial meetings (Foreign Ministers, Energy Ministers, Trade Ministers, Defence Ministers) to feed into the leaders’ meetings. But the effective disbandment of the North American Competitiveness Council (that met from 2006-9) eliminated a high-level business voice to leaders. It should be resuscitated.

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USA and Canada

For Canada, foreign relations are the USA and then the rest. The USA is our largest trading partner and our principal ally through NATO and NORAD. The USA takes ¾ of all our exports. Canada-US investment totals over $700 billion CAD. Over 400,000 people cross the border daily.

Our joint environmental stewardship, formalized in the century-old International Joint Commission of our waterways, and other agreements like the Acid Rain Treaty, Montreal Ozone Layer Protection protocol and now the Paris Climate Accord is a continuous collaboration.

Canada is the top export destination for 35 states and nearly nine million US jobs depend on trade with Canada. A recent study for the Canadian Embassy demonstrated that 78 percernt of US imports from Canada are raw materials, parts and components and services that are used to make goods and services in the United States. When Americans speak about being energy ‘independent’ they include their secure and stable provision of Canadian oil (more than OPEC), gas, electricity and uranium that helps light up Broadway and run cable cars in San Francisco.

In a relationship that generates over $2.4 billion in goods and services trade, there will always be irritants. The Keystone XL permit was important to Canada but it came to dominate the entire relationship and suck all the oxygen out of the room when it came to other critical issues. We will always have ‘issues’ – dairy supply management and intellectual property bothers the USA while for Canada it is border access. The trick is to keep matters in perspective and remember that mutual collaboration builds mutual prosperity.

Still, however, the security overhang from 9-11 slows the flow of goods and people. Leaders should take heed of John Manley, former Foreign Minister and architect of the ‘Smart Border Accord’ and now Business Council of Canada CEO, who observed in November 2013, “Obviously, 9-11 gave rise to a whole host of security concerns, some of which can be controlled at our borders. But the number of terrorists that have been detected at our borders in the past 12 years could comfortably fit inside a phone booth. We’ve managed to slow down traffic without actually finding anyone who is posing a threat. We haven’t yet found a threat in a shipment of brake linings. Maybe we will, I don’t know, but we haven’t.”

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Mexico and Canada

Mexico is our third largest trading partner and, with a middle class of 44 million, is a market that will only increase. By 2050 it is expected to rank fifth in global economic weight.

After the USA, Mexico is the place most Canadians like to vacation but the visa requirement imposed in 2009 is a disincentive for Mexicans to travel, study or invest in Canada (although Grupo Bimbo did acquire Canada Bread in 2014, effectively tripling Mexican investment in Canada). Canada’s seasonal worker’s program with Mexico is a model that should have broader application within Canada and, eventually, the USA.

Canada has become the 4th largest foreign investor ($13 billion CAD) in Mexico. Bank of Nova Scotia is Mexico’s seventh largest bank, Bombardier manufactures light rail and aviation, Magna and Linamar produce auto parts and Canadian mining firms are deeply invested in the country.

Forging a closer relationship with Mexico makes sense. The country-of-origin-labelling dispute that affected our trade in beef and pork demonstrated that our ultimate success hinged on working together.

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North American Idea

Closer continental integration is an old idea. It dates from Simon Bolivar and the liberation of Latin America and the idea of a Pan-American Union. US President James Monroe’s Monroe Doctrine (1823) was designed to keep foreign interests out of the Americas. The Organization of American States was established in 1948, although Canada did not formally join it until 1990. During the 1980 election campaign, then presidential candidate Ronald Reagan espoused the idea of a ‘North American Accord’ providing for freer movement of people and goods, stretching “from the Yukon to the Yucatan”.

Brian Mulroney and Ronald Reagan personally oversaw and ensured the negotiation of the Canada-US Free Trade Agreement (1988). Reagan’s dream shared by President Bill Clinton was to bring together all the Americas, from “Alaska to Antarctica”.

Bill Clinton shepherded through Congress the NAFTA (1994), originally negotiated by his predecessor George H. W. Bush with Brian Mulroney and Mexican President Carlos Salina, with the addition of environmental and labour side accords that were also endorsed by Prime Minister Jean Chrétien. Clinton later launched negotiations (1994) aimed at a Free Trade Agreement of the Americas but they eventually petered out a decade later, mostly because of resistance from Brazil and Venezuela.

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Previous NALS

George W. Bush launched the current series of North American Leaders’ Summits at Waco, Texas in March 2005 with Mexican President Vincente Fox and Prime Minister Paul Martin. Subsequent summits were held in Cancun (2006), Montebello (2007), New Orleans (2008), Guadalajara (2009), Honolulu (2011), Washington (2012), and Toluca (2014).

The Waco summit launched the Security and Prosperity Partnership initiative that also included a business forum, the North American Competitiveness Council. With over a hundred priorities the SPP petered out with the election of Barack Obama. The SPP had few tangible results to show for its efforts. While the NACC made useful recommendations there was little action on them by governments.

North America’s response to the H1N1 pandemic in 2009 is an example of timely and effective cooperation and the leaders agreed on the North American Plan for Animal and Pandemic Influenza (NAPAPI) to strengthen preparedness and response to future public health events.

The 2012 Washington summit, for example, announced a broadened plan for North American pandemic preparedness and a new North America-Central America dialogue on security to fight transnational organized crime. The Leaders discussed cooperation in managing borders, streamlining regulations, securing global supply chains, and advancing clean energy and hemispheric issues in the lead up to the Summit of the Americas.

At Toluca in 2014, the leaders agreed to develop a North American Transportation Plan, beginning with a regional freight plan. They also agreed to a North American Trusted Traveler Program, starting with the mutual recognition of the NEXUS, Global Entry, SENTRI and Viajero Confiable programs. They agreed to leverage the existing bilateral border mechanisms to enhance the secure movement of goods across North America and promote trilateral exchanges on logistics corridors and regional development. They committed to increasing the number of student exchanges from within the region in our respective higher education systems, in line with the United States’ 100,000 Strong in the Americas Initiative, Mexico’s Proyecta 100,000, and Canada’s International Education Strategy.

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Canada and the Trans-Pacific Partnership

Canada (and Mexico) joined the Trans-Pacific Partnership negotiations in 2012 and with the other ten members, including the USA, signed the agreement in February 2016 in New Zealand, putting in place a two-year ratification process by member states. Trade Minister Chrystia Freeland has launched a TPP consultation process declaring “just as it is too soon to endorse the TPP, it is also too soon to close the door.”

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Canada and the Americas

Canadian involvement in the Americas, like its commitment to trilateralism, has been episodic. Canada last hosted the NALS in 2007. It was to have hosted the NALS in 2010 and 2015 but they were not held.

Canada did not join the Organization of American States until 1990. Prime Minister Jean Chrétien appointed a junior minister with responsibility for the Americas and embraced the Free Trade of the Americas idea, hosting the third summit of the Americas in Quebec City in April 2001.

Prime Minister Stephen Harper also appointed a junior minister responsible for the Americas and adopted an Americas strategy that netted freer trade agreements with Peru (2009), Colombia (2011), Panama (2013) and Honduras (2014). Trade negotiations with the Dominion Republic, Guatemala, Nicaragua, El Salvador and the Caribbean Community (Caricom) are ongoing.

Earlier this month Minister Chrystia Freeland signed a joint declaration in Mexico City enhancing Canada’s observer status with the Pacific Alliance (Mexico, Peru, Colombia and Chile).

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About the Author

A former Canadian diplomat, Colin Robertson is Vice President and Fellow at the Canadian Global Affairs Institute and Executive Fellow at the University of Calgary's School of Public Policy. He is Senior Advisor to Dentons LLP working with the Business Council of Canada. He is a Distinguished Senior Fellow at the Norman Paterson School of International Affairs at Carleton University. He is chair of the board of Canada World Youth. He is a member of the board of the Conference of Defence Associations Institute and the advisory board of the North American Research Partnership. He is a past president of the National Capital Branch of the Canadian International Council. He is an Honorary Captain (Royal Canadian Navy) assigned to the Strategic Communications Directorate. He writes a column every two weeks on foreign affairs for the Globe and Mail and he is a regular contributor to other media.

Contact: [email protected]

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