Economy, Environment and Security: Taking the Canada-United States Relationship to a New Level

February 19, 2009

The visit of United States President Barack Obama to Ottawa on February 19, 2009, presents a vital opportunity to take Canada’s relationship with its closest friend, neighbour and ally to a new level.

The global economic crisis makes it especially important to launch bilateral initiatives in three areas: the economy; energy and the environment; and defence and security.  As leaders of the Canadian business community, we believe that President Obama and Prime Minister Stephen Harper should consider the following priorities:

1. Work together to speed economic recovery.  Governments in both countries will be more effective in driving a faster return to economic growth if they make sure that their stimulus measures are mutually reinforcing.  Canada and the United States do not merely sell goods and services to each other; we make products together to sell to the world.  Governments should do their best to ensure that measures to support industry are complementary and should avoid any action that would slow the flows of trade between us or add to the costs of production.
   

   In particular, it is essential that the complex web of trade between the two countries not be disrupted by the “Buy American” provisions in the American Recovery and Reinvestment Act.  The United States buys the vast majority of Canada’s exports, but Canada also is the largest export market for 35 American states.  The stimulus legislation recognizes the need for implementation of this provision in a manner consistent with international and bilateral treaties, and we urge President Obama to do everything in his power to ensure that commerce remains open.

   
   

   President Obama and Prime Minister Harper also should agree to work together to discourage protectionism around the world.  Putting up barriers to trade did immense damage in deepening and prolonging the Great Depression in the 1930s.  This mistake must not be repeated today, in an era when all countries are more dependent than ever on the free flow of goods, services and investment.

   
   

   Canada and the United States also should accelerate their continuing efforts to reduce the cost of doing business across our shared border.  The economic downturn increases the urgency of addressing issues such as minor but costly differences in regulation.  We recommend immediate action in the highly integrated and deeply troubled automotive sector, in which our regulatory goals and standards are virtually identical and unnecessary costs can no longer be tolerated.

   
   

   The roots of the current crisis in financial markets suggest a need for greater dialogue in financial regulation.  The World Economic Forum recently ranked the Canadian banking system as the strongest in the world. Paul Volcker, head of President Obama’s Economic Recovery Advisory Board, has noted that Canada has been “relatively less infected” by the financial crisis and has pointed to our example as “the direction in which I think the financial markets should go.”  Our ministers and officials meet regularly in international fora, but we recommend an increase in bilateral exchanges and perhaps a permanent dialogue in this area.

   
   

   Finally, while governments are understandably focused on the short-term need to preserve and create jobs, there is no escaping the longer-term demographic challenge that both our countries face.  We need to begin talking now about measures to strengthen our competitiveness once the recovery takes hold.  In particular, we recommend that President Obama and Prime Minister Harper consider the benefits of greater labour mobility between our countries.  Allowing Canadians and Americans to work more freely in both countries would have a positive impact even in the current circumstances, and would help enterprises in both countries strengthen their competitiveness in the years ahead as we face increasingly severe shortages of skilled labour.

   
   
2. Launch a bilateral energy and environment initiative.  The environment and energy security are clearly established priorities for Canada and for the United States.  Both President Obama and Prime Minister Harper have expressed the desire to explore the potential for a North American market in greenhouse gas emissions, and we recommend that they launch formal discussions toward this goal.  A coordinated approach to the management of greenhouse gases is essential to the ongoing competitiveness of our economies.  Our countries also are natural allies in moving international climate change negotiations toward a sustainable, long-term and truly global solution to this challenge.
   

   Energy prices have declined dramatically in recent months, but global demand inevitably will lead to tighter supplies and a return to higher prices in the years ahead.  We recommend that Canada and the United States forge a joint strategy for improving clean energy technologies and expanding the secure North American supply and distribution of all forms of energy while reducing their overall environmental impact.  As the most important and secure foreign supplier of energy to the United States, Canada can play a major role in helping to shape this strategy. 

   
   
3. Enhance joint management of North American defence and security.  Canada and the United States have together secured our territories for more than five decades under the North American Aerospace Defence Command (NORAD).  In 2006, the bilateral alliance was made permanent and its warning mandate was expanded to maritime as well as air and space approaches to the continent.  We support the idea that the full NORAD mission of surveillance, warning and control be extended to the land and maritime domains, to create a unified and seamless system for North American defence.

We recommend that President Obama and Prime Minister Harper also begin a discussion on the potential for extending the principle of bi-national command beyond NORAD to encompass the way we manage our borders.  If we are to succeed in making the flow of goods and people across the Canada-United States border as efficient as possible, we must move well beyond our best efforts to date in terms of joint border management and the cooperative development and implementation of new security technologies.  Meantime, both governments have recognized that infrastructure is a central element of fiscal stimulus, and we recommend that upgrading capacity at border crossings remain a top priority for infrastructure investment.

In addition to launching a concerted effort to strengthen the bilateral relationship, we urge President Obama and Prime Minister Harper to build on our record of cooperation internationally.  Canada and the United States have been working together closely within the G8 and the G20 to ensure a coordinated global response to the economic downturn.  We also are natural partners in promoting human rights and respect for the rule of law around the world.  And we remain firm allies in the struggle against global terrorism, against the Taliban in Afghanistan and in contributing to peace and security worldwide through the North Atlantic Treaty Organization (NATO).

We also have an extraordinary partner and friend in Mexico.  Canadians have developed a much stronger relationship commercially, politically and culturally with Mexico since the signing of the North American Free Trade Agreement (NAFTA).  As business leaders, we cannot overstate the enormous benefits that have accrued to all three countries since the signing of the NAFTA. 

Over the past four years, the Leaders of Canada, the United States and Mexico have held an annual summit under the auspices of the Security and Prosperity Partnership of North America (SPP).  In 2006, the three governments gave greater focus to a series of initiatives including the creation of the North American Competitiveness Council (NACC), a trilateral private-sector advisory board on which some of us are privileged to serve.  This framework has enabled governments and the private sector in all three countries to work together constructively.  The issues that the SPP and the NACC were created to address are still with us, and we recommend that governments remain committed to an effective trilateral process that includes annual summits and private-sector engagement.

At the same time, there is an urgent need for intense bilateral cooperation between Canada and the United States – to speed economic recovery and to lay the foundation for stronger growth; to reinforce each other’s efforts to ensure secure access to energy as well as a cleaner global environment; and to strengthen both the protection of our borders at home and the peace and security of others around the world.

This week’s meeting between President Obama and Prime Minister Harper in Ottawa will necessarily be short, but we hope that it will mark the beginning of a new era of cooperation between our two countries.  As Canadian business leaders, we are committed to doing everything we can to help by working both with governments and with our private-sector colleagues in the United States.  We offer to President Obama and Prime Minister Harper our best wishes for a productive discussion that will prove to be the first of many.

Canadian Council of Chief Executives

As Canada’s senior business association, the Canadian Council of Chief Executives (CCCE) has championed closer economic and security cooperation between Canada and the United States for more than 30 years.  The CCCE is composed of 150 chief executive officers and leading entrepreneurs from all major sectors and regions of the country, and its members lead companies that collectively administer $3.5 trillion in assets, have annual revenues of more than $800 billion, and are responsible for the vast majority of Canada’s exports, investment, research and development, and training.  The CCCE will hold its next Canada CEO Summit in Washington, D.C., on March 23 and 24, 2009.