Time to take North American regional co-operation seriously

by Colin Robertson

The Globe and Mail
August 18, 2015

Are we overlooking the potential of North America? Looking across our oceans for new markets makes good sense. But as the still-to-be-implemented Canada-European Union deal and the still-to-be-negotiated Trans Pacific Partnership illustrate, getting there is easier said than done.

Later this week, the North American Forum meets in Toronto, armed with a series of recent reports underlining the opportunities within North America. Their analysis and collective recommendations help set the table for the North American Leaders’ summit that Canada will host after our election this fall.

Before the dissolution of Parliament, Canada’s Senate and House Foreign Affairs committees released studies arguing that, while NAFTA worked, we now need a new regime to manage our growing economic integration.

North American supply chains, now continental in scope, serve a market of 465 million people. Innovation has given us extraordinary energy advantages. We need to focus on improving the arteries of transportation, especially at border choke points. A restructured North American Development Bank could finance new infrastructure. We must do a better job of linking training to required skills and then improving continental labour mobility.

National governments need to lead. They can create the trilateral integrative frameworks for action. There is plenty of creativity and useful experimentation on issues like climate change by states and provinces.

Both parliamentary reports argue for more attention to border barriers and regulatory convergence. The public favours trade liberalization, but governments and legislators need to demystify and better explain their trade agendas.

The Senate report recommends more Canadian diplomatic offices in the U.S., recognizing that trade and politics “is local.” We need regular meetings between the three countries’ parliamentarians to trouble-shoot problems. The House report wants our regulators to harmonize standards.

Building on the recent U.S. Council on Foreign Relations report that he co-authored, former general David Petraeus argues that North America is the “next great emerging market.” Gen. Petreaus’s Belfer Center report says the “synergistic” catalysts to lift the three economies are dynamism in energy, advanced manufacturing, and life sciences and information technology.

Our continental advantages, Gen. Petraeus says, include Canada’s banking system and resilient oil and gas sector. The U.S. continues to breed innovation and entrepreneurialism, with agile capital markets and small firms adept at applying new technologies. With its young and skilled workforce, Mexico is becoming a manufacturing hub.

Each of these reports point to the remarkable economic transformation taking place in Mexico. Mexico is becoming a majority middle class nation.

Mexico still faces challenges from the drug cartels and corruption. Resolution will take time and effort, starting with policing and judicial reform at the state level. But the reforms to labour, education and energy are real. Mexico’s growing middle class is already bigger than the entire Canadian population. By 2050, Mexico is projected to be amongst the globe’s top five economies. The Senate report argues Canada requires a comprehensive Mexico strategy that prioritizes educational exchanges.

A useful study by Laura Dawson looks at the Canada-Mexico relationship. Dr. Dawson, who now directs the Washington-based Wilson Center’s Canada program, contends that supply chain dynamics – notably autos and aviation – as well as investments in banking and mining, provide a solid foundation for closer Canada-Mexico relations.

In a recent major policy speech on North America, Liberal Leader Justin Trudeau recognized that managing the U.S. relationship is a prime ministerial priority. He promised to resurrect a cabinet committee focusing on the U.S., expand our diplomatic footprint within the U.S. and put renewed emphasis on easing the cross-border flow of people and goods.

Mr. Trudeau also promised to lift the Mexican visa requirement imposed in 2009. A poor decision, badly executed and later compounded by gratuitous comments, it unnecessarily irritated our third-largest trading partner. It has cost Canada in potential commerce and investment.

Conservative Leader Stephen Harper and NDP Leader Thomas Mulcair should speak on how they would manage continental integration and our relations with the United States and Mexico.

This fall’s North American Leaders’ summit must be more than just a photo opportunity. As the Senate report concluded: “While it is critical that Canada take steps to seize … opportunities wherever they exist, we must also remain actively engaged – commercially, politically and interpersonally – in our immediate neighbourhood.”

Within North America, we have an opportunity to develop a new model of working together – less bureaucratic and centralized than that of the European Union. It would respect national sovereignty, preserve each country’s monetary and fiscal independence, and recognize that the states and provinces are more likely to find pragmatic solutions to our issues and irritants.

Remember that old Tin Pan Alley tune: “I’m looking over a four-leaf clover that I overlooked before.” Well, it’s time to look anew at North America.

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