Shaping a More Competitive North America to Help Canadians Take on the World

April 26, 2007

Thank you for the opportunity to appear before you this morning to talk about the Canada-United States relationship. The Canadian Council of Chief Executives has been a strong supporter for decades of efforts to make the border between Canada and the United States less of a barrier to people and goods.

In the days before the Canada-United States Free Trade Agreement, our main goal was to enable Canadians to gain better access to the huge market to our south. But today, the efficient flow of goods and services between our two countries does more than provide Canadian companies with access to the United States. It is critical in helping companies on both sides of the border compete more effectively against new economic powers such as China and India that are transforming patterns of trade and investment worldwide.

The terrorist attacks of 9/11 ushered in a new era in North America, one in which the focus of public policy in the United States shifted toward security as its central priority. At the same time, decision-makers in both our countries recognized that physical security and economic security go hand in hand.

As we consider how best to take on the rest of the world, we have to recognize that while goods imported into North America from overseas face only one customs inspection, those that are produced within the continent typically cross borders many times as value is added to raw materials that eventually become finished goods. Every measure that adds to the cost or time to cross borders within North America is in effect a tax on enterprise, a tax on investment and a tax on jobs across the continent.

A clear understanding of this reality led to the launch of the Security and Prosperity Partnership of North America (SPP) at the 2005 Summit of North American Leaders in Texas. This agreement was both visionary and practical. Strategically, it recognized that the growth of all three economies required much more intensive cooperation to ensure that companies could continue to invest and create jobs in the face of intense global competition. But practically, it recognized that while there was no appetite for a new grand bargain on the trade front, there was immense room for progress by doing a lot of little things better.

The focus of the SPP on issues that can be addressed without the need for treaties or legislation has led some critics to portray it as a grand bargain in disguise. But the underlying principle of the SPP is simply to encourage a common sense approach, to deal in practical ways with practical issues that can help the economies of all three countries work better. The initial SPP agenda included some 300 different items. Many of those items represented small steps that individually would not have much impact. Taken together, even 300 small steps add up to a pretty giant leap for North America – there’s no grand bargain involved.

When Leaders met in Cancun for the first anniversary of the SPP, they recognized that more direct advice from the private sector would help to drive progress on measures that would be most effective in enabling North American companies to attract investment and create jobs. The result was the creation of the North American Competitiveness Council (NACC), a trilateral advisory body made up of business leaders from each of the three countries. In doing so, Leaders decided that the NACC should function fully independently of governments. NACC members then requested the support of organizations with relevant expertise in each country to act as their secretariats, and my Council is pleased to be serving as the Canadian secretariat.

Once appointed, the NACC moved quickly. By August, members had agreed to focus on three strategic priorities: border facilitation, regulatory cooperation and energy integration. Over the next four months, the secretariats consulted broadly across the business communities in their respective countries. A draft report to ministers was completed by early December, and the final report, reflecting a strong consensus across the business communities of all three countries, was approved in January 2007.

The report makes a wide range of recommendations, more than 50 in all. The section on border facilitation makes recommendations in four areas: emergency management; expansion of border infrastructure; the movement of goods; and the movement of people. On the regulatory front, the report supports the goal of completing a North American Regulatory Framework Agreement this year, and makes specific calls for action related to food and agriculture, financial services, transportation and intellectual property. And in the energy section, the report calls for trilateral measures related to cross-border distribution systems, human resource development and clean energy technologies and offers thoughts on potential actions that could be taken by Mexicans to accelerate development of their resource base.

Across all three areas, the NACC also urged governments not to slip into reverse and allow borders within North America to become more rather than less of a barrier to goods or people. The report highlighted two specific issues: the impact of the United States Western Hemisphere Travel Initiative (WHTI) on the movement of people (and lineups at passport offices); and the new inspections and fees being imposed by the U.S. Animal and Plant Health Inspection Service (APHIS).

The NACC presented its report to the responsible ministers from all three countries at a meeting here in Ottawa on February 23. It is a public report. It is available on multiple websites, including our own, and I have hard copies with me for anyone who has not seen it.

Governments already are taking action on these recommendations. The 2007 federal budget addressed two directly: the elimination of withholding tax on cross-border payments of interest and expanded investment in new capacity for the Detroit-Windsor border crossing.

We are seeing progress on other issues as well.  One of the most critical is the pilot project for land preclearance. Moving customs processing away from the border itself is key to easing congestion at major land crossings, and this project has been on the books since the original Smart Border accord. My understanding is that, as of the beginning of this week, only a single issue remained to be resolved.  I hope that this will be worked out very soon.

Members of the NACC will report to Leaders at the next North American summit, scheduled to be hosted by Canada this summer. And as they move into the second year of their mandate, they plan to consider further practical ways to help companies and communities across North America to compete more effectively in the global economy. Thank you.