New Directions: Managing the Canada – United States Relationship (Notes for Closing Remarks)

December 5, 2003

This has been a stimulating conference. We have shared insights, experiences and no small amount of wisdom. My fellow co-chair, Herb Gray, and I have been invited to offer some concluding comments. For my part, this task is made easier because of the many excellent contributions from speakers and delegates both yesterday and today. We have talked at length about the daunting challenges that Canada faces in forging a sovereign path forward in an integrating world. But we also have agreed, I believe, that there is cause for hope, that Canada can indeed achieve great things on the global stage.

There is no getting around the fact that both within North America and globally, a successful strategy for moving forward must come to grips with issues of security. For too many years, Canada effectively has been a free rider on the coattails of the United States military. As such, we have failed to exercise our sovereign powers and have lost respect and credibility as a serious contributor to global peace and security.

To protect Canadians, we need to defend our own territory and people. This alone, as incoming Prime Minister Paul Martin has suggested, will require an integrated approach to security that coordinates the work of the military, the coast guard, customs and immigration officials and police forces — an approach that was echoed at this conference yesterday by Solicitor General Wayne Easter. It also will require, in my view, a significant injection of new capital into our military forces. In this regard, I share the concerns expressed to us by Professor Doug Bland of Queen’s University and a growing host of respected commentators across Canada.

Only by showing the world that we are capable of defending ourselves can we hope to rebuild our influence internationally. Only by rebuilding our military will we be able to persuade the United States to see us as a real partner in meeting the shared challenge of securing North America and to ensure the continued uninterrupted flows of people and goods between our countries. And only by shaping more focused but well trained and well equipped armed forces can we honour our proud traditions and our values and play a meaningful role in strengthening peace and security globally.

Strength abroad, though, flows from strength at home. To restore our reputation as an independent, trusted and influential power in global affairs, we must continue to build on our economic base. In the words of Donald Macdonald, who is here with us today, Canadians took the "leap of faith" into free trade in the late 1980s. Adapting was not easy, but the resulting benefits are now self-evident. Fiscal reforms followed, giving Canadians an ever-greater advantage. The world, however, does not stand still, and to continue growing our economic base, we will need to take a hard look at how best to compete as a country in the years ahead.

Our most critical challenge on the economic front is to establish distinct competitive advantages within an increasingly integrated North America. As my Council has said for many years, Canada will do itself no favours by trying to copy the Americans. As the smaller economy, Canada must decide what we can do better than our southern neighbours and must make a compelling case to Canadian and foreign investors alike that this country is the best possible base for competitive and profitable enterprises serving customers across North America and around the world. In the words of my organization’s Canada Global Leadership Initiative, our goal must be to make Canada "the best place in the world to live, to work, to invest and to grow."

In summary, to exercise our sovereignty and restore our global reputation and influence, Canada needs a thorough review of its priorities in diplomacy, development and defence, one that will require significant additional resources. To fund ambitious new goals internationally, it is essential that we get the economy right at home. And in addressing the twin challenge of economic and physical security, Canada has no choice but to focus on how best to manage its relationships within North America.

What I would like to suggest today is that a successful Canadian strategy for North America must be based on three "C"s. It must be comprehensive. It must be coherent. And it must be continental. Let me explain.

The idea of a comprehensive strategy is at the core of the North American Security and Prosperity Initiative launched by the Canadian Council of Chief Executives in January of this year. Based on the overarching imperative that Canada must affirm a vibrant independence and distinct personality in North America and the world, we moved forward with two basic propositions: that the economic integration of our continent is irreversible and that economic security and physical security have become inseparable.

The framework we laid out suggested a strategy based on five interlocking pillars: reinventing borders; achieving regulatory efficiencies; negotiating a resource security pact; reinvigorating the North American defence alliance; and developing new institutions for managing the increasing interdependence of North America.

Over the past two years, the focus of discussion between Canada and the United States has been on border management. As we have heard here from speakers such as United States Ambassador Paul Cellucci and Minister of National Revenue Elinor Caplan, much already has been accomplished. Our two countries have been working closely, sharing information, developing and deploying new tools for managing risk, expanding border infrastructure and experimenting with new ways to speed the flows of low-risk goods and travellers while beefing up security overall.

All this must continue, but, as Professor Michael Hart argued at this conference, the reinvention of borders must go well beyond their day-to-day management. To make sure that governments can focus their resources and people on the imperative of security, it makes sense to look at how to reduce other functions and costs at the border. By harmonizing tariffs, for instance, we can eliminate the need for rules of origin. I would add that we do not need to achieve a full customs union to make real gains on this front. Similarly, we can work on ways to reduce the number of non-tariff barriers and trade disputes that require expensive and time-consuming border actions. Exemption from trade remedies is a long-standing goal of Canadian trade policy and perhaps we can eventually achieve it, whether all at once or over time, sector by sector.

In the meantime, there are other ways to whittle down the frequency and impact of trade disputes. Energy security, for instance, has become a central preoccupation of the United States government. Canada already is the largest and most secure supplier of energy to the United States, and as David Mann, chief executive of Emera Inc., pointed out, there is much that we could do to expand and speed up the development of our energy resources. On the other hand, Canadians have been frustrated for more than two decades over the relentless attempts by a narrow sector of the United States economy to restrict exports of Canadian softwood lumber. Perhaps through a comprehensive resource security pact we could achieve consistent respect for both security of supply and security of access across all resources.

The other way to reduce both the potential for trade disputes and a vast array of costly and time-consuming administrative procedures at the border is to encourage greater regulatory compatibility. In the trucking sector, which is responsible for the vast majority of transborder transportation in goods, Canadian Trucking Alliance CEO David Bradley explained how much could be achieved. Canada and the United States share many regulatory goals and have rules that often differ only in detail. Any Canadian strategy for North America clearly should seek to eliminate as many of these regulatory issues as possible, either through explicit harmonization or through mutual recognition and acceptance of each other’s standards.

I already have talked about the need to integrate these economic and trade issues with those of defence and security, and on both fronts, it seems obvious that big changes in the way we manage our North American relationships also will require new institutions. The Council has never suggested that North America should try to follow the European model in developing centralized supranational institutions as outlined yesterday by Eric Hayes, Ambassador of the European Commission to Canada.

No single bilateral institution can cope effectively either with the diffuse power structure of the United States government or with the provincial as well as federal dimensions of the challenge within Canada. Rather, we need to build on the strengths of the extensive networks our two countries already share, including the Permanent Joint Board on Defence and the North American Aerospace Defense Command (NORAD), to name just two in the military sphere.

One of the most successful examples of a focused joint institution, the International Joint Commission, is certainly familiar to my co-chair at this conference. The Council believes that a range of smaller joint bodies with limited mandates to identify and resolve problems is a promising means of building the institutional capacity that North America needs in the years ahead.

In short, a successful Canadian strategy for North America must address every aspect of our North American relationships: trade and investment, tariff and non-tariff barriers, the movement of people and goods, energy and other key resources, regulations, defence and security and new institutions. Whether Canada chooses to peck away at individual issues on an incremental basis or opts for broad negotiations with links between issues, our country needs to develop an overall strategy that is comprehensive in scope.

My second "C" involves the coherence of Canada’s efforts to develop and advance such a strategy. A comprehensive strategy necessarily involves issues that cross many departments within the federal government and indeed every level of government in the country. This will require extraordinary efforts to coordinate the work of a multitude of people and organizations.

At the political level, Mr. Martin already has suggested some important steps forward, most notably the creation of a new cabinet committee on the Canada – United States relationship that would be chaired by the Prime Minister himself. These and other measures he has put forward will ensure that a coherent approach is driven from the top.

Parliamentarians also have a critical role to play in building coherence in our continental relationships. Given that in the United States in particular, "all politics is local", relationship-building among legislators on both sides of the border should be a priority. This was the point emphasized at our conference by parliamentarians Joe Comuzzi and David Pratt. Such is the importance of their work that I would urge incoming Prime Minister Paul Martin to significantly expand on the meager resources currently at their disposal.

The federal public service also has anticipated the need for greater understanding of Canada – United States issues across departments. In particular, I want to applaud the work of the Canadian Centre for Management Development, which in September launched an eight-month, advanced seminar and study tour program on
Canada – United States issues for deputy ministers across all departments of the federal government. This
forward-looking program is precisely what Canada needs in order to forge and execute a coherent and comprehensive strategy for North America.

With efforts to foster greater coherence within the federal government well underway, the next big challenge will be to ensure the full involvement of provincial, territorial and municipal governments. Trade negotiations as well as defence and foreign policy are a federal responsibility, but the range of issues involved in a comprehensive North American strategy inevitably will sprawl across many areas of provincial jurisdiction as well. On a more practical level, key issues such as border infrastructure and the competition for investment also involve municipal interests and responsibilities.

Here again, I see plenty of reason for optimism. Mr. Martin has clearly signaled his desire to work more closely with provincial and territorial governments and to consider a new deal for Canada’s municipalities. Provincial governments, for their part, are exploring ways to work together more effectively on the national agenda, most notably through the new Council of the Federation. In one way or another, it will be vital for Canada to forge a strategy for the country that has the active involvement and support of every level of government.

My final "C", continental, refers to the optimal scope of Canada’s strategy. In the wake of the terrorist attacks of September 11, 2001, most of Canada’s negotiations have been focused on issues of security and border management on a bilateral basis with the United States alone. The Smart Border Declaration of December 2001 and its 30-point action plan is an example of what had to be done bilaterally in order to achieve quick results.

On some issues at least, the United States will want to continue pursuing different approaches in the short term. What it can achieve in enhancing energy security through its already open relationship with Canada will continue to exceed what is possible for Mexico within its Constitution to tap foreign investment in expanding production of its oil and gas resources. Similarly, the issues involved in controlling the movement of people across the 49th parallel are different than those in play along the Rio Grande.

Despite the resulting differences in the potential for action in the short term, Mexico clearly shares many of Canada’s strategic goals. This I can attest to from a number of conversations that I have had with President Vicente Fox and with members of his cabinet. This also was made amply clear at our conference by Teresa Madero, Mexican Ambassador to Canada. Mexico is now exploring a growth and employment strategy that includes increased private investment in the energy sector, labour market reforms to increase productivity and further structural and fiscal reforms to encourage foreign investment. Mexico also has made it clear that it wants to see full implementation of the NAFTA, better and safer customs procedures, greater exchanges of information, more secure borders and common tariffs in certain areas.

In the longer term, trilateral solutions may be feasible even in some of the more difficult issues. Both American and Mexican commentators, for instance, have raised the possibility of either United States or joint NAFTA immigration controls at airports in Mexico, with the goal of easing flows within the continent by controlling entry from non-NAFTA destinations at the first point of entry to North America.

From a purely pragmatic political point of view, it is in Canada’s interests to consider the Mexican dimension in any bilateral discussions it has with the United States. More than 20 million American voters are of Mexican descent, and speaking to their opinions and aspirations could add considerably to Canada’s ability to promote an ambitious bilateral agenda in Washington.

A trilateral approach also is likely to broaden support within the business community in the United States. The huge volume of Canada – United States trade combined with the high degree of cross-border ownership and intra-firm trade provides a strong natural constituency for a strategy of building on the bilateral Smart Border action plan. American business interests, however, involve considerable trade across the border with Mexico as well. A Canadian strategy that advances measures to improve the Canada – United States border as potential prototypes for similar actions on the southern border could attract even broader support within the American private sector.

In short, I am suggesting that the heart of Canada’s strategy for North America must remain trilateral. The goal of trilateral progress may be served best by negotiating initial agreements in some areas on a bilateral basis. But even when negotiating bilaterally with the United States, Canada should work closely with Mexico to maximize the potential for subsequent trilateral agreements.

The challenges of conducting trilateral and parallel bilateral negotiations apart, I believe that the idea of a North American community should be pursued as a long-term goal. To give impetus to this initiative, I have proposed that the Prime Minister of Canada and the Presidents of Mexico and the United States should meet at a continental summit each year, and that Prime Minister Martin should take the lead in making this happen.

Before closing, allow me a final point. American trade negotiator Bill Merkin warned us this afternoon that interest in the United States for a comprehensive, coherent and continental strategy of the kind I have outlined would be lukewarm at best — and in the current pre-electoral environment, virtually non-existent. He may be right, but I disagree with him about the potential for reversing this attitude. I remember well how uninterested our American friends were in the early 1980s in the free trade proposals put forward by the Canadian business community. I remember as well the hostility to the idea in federal government and opposition party circles here in Canada. In due course, the idea of a comprehensive free trade agreement took root and, championed by Prime Minister Brian Mulroney and President Reagan, it became reality.

Today, the case for even closer continental co-operation on a multiplicity of fronts is vastly more compelling than it was in the 1980s. Put simply, we are considerably more interdependent now than we were then, and an additional differentiator is the need for comprehensive security arrangements. Moreover, Canadians are much more at ease with the idea of closer co-operation with Americans in large part because we are more confident of who we are and of our unique place in North America and the world.

To conclude, I would like to come back to the issue of sovereignty, a subject that has preoccupied us throughout this conference. Both my colleague Herb Gray and I have spoken of the importance of a distinct and vibrant Canadian personality, and we are in agreement that both Canadians and Americans must be creative in seeking closer co-operation while respecting our individual concerns about sovereignty.

To make this point, Herb quotes with great effectiveness the wisdom of American poet Robert Frost. In the poem "Mending Wall", Frost’s neighbouring farmer tells him "Good fences make good neighbours". As an active gardener, I can relate to this but I wonder if in 21st century terms there is a more appropriate image for defining national space and interest.

Incoming Prime Minister Paul Martin once spoke of "nationalism without walls". This image, I would suggest, is more in keeping with our times and circumstances. It embraces a world where ideas, relationships, skills and economic activity transcend borders. It recognizes that strength at home through advanced governance and a strong economy provides a powerful expression of Canadian nationality. It also assumes that sovereignty is not an abstract goal or an end in itself but rather a tool to be used to affirm Canada’s personality through our economic achievements, our practice of vigorous diplomacy, our commitment to international development, and our willingness to share in the responsibilities of advancing and enforcing peace and security.

The triumph of Canadian values cannot flow only from what we do distinctly within our own borders, but rather from the extent to which we are able to make a difference in the world. In addressing the dual challenge of economic and physical security that dominates our world today, there is no question that Canada’s strategy for North America will be central to its global success. This is why I will conclude by repeating my strong belief that a winning Canadian strategy for North America must be comprehensive in its ambitions, coherent in its development and execution and continental in its scope.

Next Friday, Paul Martin and his new cabinet will take office. Among the many priorities they will tackle, advancing a creative, bold and confident North American strategy will be high on the list. United States Ambassador Paul Cellucci yesterday spoke of the deeply-rooted friendship that always will guide the relationship. President John F. Kennedy captured the essence of the relationship with words that continue to resonate today. "Geography has made us neighbors. History has made us friends. Economics has made us partners. And necessity has made us allies. Those whom nature hath so joined together, let no man put asunder."