Beyond missiles: Canada and the U.S. must push toward the seamless movement of goods, full labour mobility and energy security

March 4, 2005

The following article appeared in the March 4 edition of the National Post: 

By Thomas d’Aquino

Like many Canadians, I am greatly disappointed by the decision of my government not to participate fully in the development and deployment of the U.S. anti-ballistic missile system. To reject a course of action so manifestly in our national interest is also inconsistent with our long-standing commitment to the defence of North America. It is my hope that this decision will be reversed by a future Parliament, by a Liberal-Conservative coalition if necessary, that will recognize the logic and wisdom of full Canadian participation and that will vigorously make the case for involvement to the electorate.

Canada and the United States are proud and sovereign nations and we will continue to pursue independent agendas on many fronts in accordance with the wishes of our peoples. Our destinies, however, are irrevocably linked and we both will be stronger if we acknowledge our common challenges and if we combine our unique strengths to shape a more secure and more prosperous North America.

Canada and the United States in 1988 took a “leap of faith” into a comprehensive free trade agreement. The time has come to take a new leap together, a leap beyond free trade, a leap into an even closer partnership that will strengthen both of our great nations.

We also have been taking action at the trilateral level. In September 2004, my organization, the Canadian Council of Chief Executives, joined with the Council on Foreign Relations and the Mexican Council on Foreign Relations to launch an independent Task Force on the Future of North America. This Task Force, co-chaired by former Canadian deputy prime minister John Manley, former Massachusetts governor Bill Weld and former Mexican finance minister Pedro Aspe, has now met three times. The task force hopes to present its conclusions this spring. At a likely meeting later this month, President Bush, Mexican President Vicente Fox and Prime Minister Martin have a timely opportunity to set a bold and visionary agenda for North America.

Meantime, I believe that the time is also right for a major new bilateral initiative between Canada and the United States. Let me give you a summary of what I see emerging as the key elements of a new partnership between Canada and the United States.

First, under the concept of reinventing borders, we need to bring together our agendas for managing both trade and security. On the economic front, we should aim for nothing less than a seamless market for trade in goods.

What do I mean by a seamless market? For starters, it is time to accelerate harmonization of the tariffs we charge to third countries. These differences require costly rules of origin to be applied to trade under the duty-free provisions of the NAFTA, costs that are so high that many companies are choosing to ignore the NAFTA and simply pay the multilateral duty rate. Within five years, we ought to be able to agree on a common external tariff across the board, and perhaps even a formal customs union.

But when I talk about a seamless market, I also am talking about one in which we stop fighting amongst ourselves. Protectionism within North America simply hurts people on both sides of the border. At the very least, we should improve the current dispute settlement process, moving from ad hoc panels to a permanent panel that would enable professional full-time judges to be appointed and encourage faster and more consistent resolution of disputes.

Let me suggest that we should go even further, and at least temporarily suspend the application of countervailing duty and anti-dumping rules against each other’s companies. Our shared interest in making North America more competitive should take precedence over the handful of grudge matches that are still being pursued in a few sectors.

A possible third element to creation of a seamless market would be to enable full labour mobility between our two countries. Allowing any American or Canadian to work freely in either country would improve labour market flexibility across the continent and help enterprises in both countries attract the skills and talent they need to compete most effectively on the global stage.

This reinvention of our border for commercial purposes through the seamless movement of goods and labour is linked to the second pillar of our North American strategy, that of managing regulatory convergence. Our two countries share a strong commitment to protecting the environment and human health and safety. We both maintain high regulatory standards and effective enforcement mechanisms in pursuit of this goal. Do Americans or Canadians really care whether “cheese-flavoured popcorn” has a maximum of 49 percent real cheese as in the United States or 53 percent as in Canada?

In some cases, we will find compelling reasons to keep doing things differently. I do not believe that the Sarbanes-Oxley Act represents the best way to deal with issues of corporate governance and restore investor confidence in financial markets. We favour a different approach that avoids what we see as key flaws in Sarbanes-Oxley such as the heavy costs it imposes on the smaller issuers.

Another pillar of my Council’s North American strategy is that of resource security. Canada has the potential to increase its oil and gas production significantly. Canada and the United States already are committed to open investment and free trade in this sector, but there are steps that we could take to accelerate the development of this strategic resource. To do this requires cooperation on issues such as the best route for a pipeline from Alaska and Canada’s Arctic.

Whatever we choose to do on a trilateral basis, Canadians and Americans must move with greater clarity, determination and creativity to make the most of the amazing partnership that has been forged over the years between our two countries.

Thomas d’Aquino is chief executive and president of the Canadian Council of Chief Executives, composed of 150 chief executives of major enterprises in Canada. He is the Canadian vice-chair of the Independent Task Force on the Future of North America.