Stephen Harper Highlights BTB in Interview with Robert Rubin

From the Council on Foreign Relations A Conversation with Stephen Harper's Q&A session:

GORDON GIFFIN: So my -- really, my question is, is there a chance of a much bigger initiative between our two countries at some point, to break down the anachronistic rules that impede economic efficiencies in North America, some of which have been done in Europe? I'm not talking about creating an EU with a large governance or anything, but the economic efficiencies.

Last thing I'll say, when I was in Canada working on things like this, I found the impediment to that to be an insecurity in Canada about dealing with the United States, that we were somehow going to assimilate Canada. I don't see that anymore. I think Canada's much more self-confident in dealing with the United States and the world. So if that's the case, is there a chance at doing a bigger deal going forward?

HARPER: Well, Gordon, let me just begin by just repeating -- I know you're familiar with it -- some of the things we are doing, because I think we do have some significant initiative going forward.
We have the -- what we call the Beyond the Border Initiative where we are attempting through a series of individual initiatives and investments and closer cooperation between border authorities, to make things more seamless at the border and to push a lot of -- you know, inspections out around the perimeter of North America to try and arrange our affairs so that, as we say things, are -- things are -- you know, may enter twice, but are inspected only once. And we're doing some of those things.

We also have a parallel initiative called the Regulatory Cooperation Council, where we've identified 29 areas to create greater consistency and harmonization of regulations and more importantly, in my judgment, especially for our side, is to find ways in those areas where we will prevent regulatory -- unnecessary regulatory difference and duplication going forward, where we try and identify some of those things in advance, try and change some of the processes.

And I should mention one very specific project of international cooperation, which is the president just issued a permit for the Detroit River International Crossing, which this is financed largely by Canada, but this will be -- this is a huge piece of infrastructure in what is -- and we often forget the size of this relationship -- what is the largest single trade corridor in the entire world, the Detroit-Windsor trade corridor.
So we have some important initiatives going forward. Could they lead to something systemically more integrated? Look, I think on our side, they could. I think on our side, they could. I agree with your assessment. I think the view -- we had a watershed election in 1988 over the free trade agreement with the United States, and the opponents argued that whether economic integration with the United States -- greater economic integration and trade would lead to wealth or not, it would cause Canada to lose its political independence and identity.

What we've seen is it has led to vast increases in cross-border trade without any such loss of political independence or identity. In fact, this past year, as you know, we've been celebrating the War of -- the War of 1812, which --
RUBIN: I know. (Chuckles.)

HARPER: -- permanently established this -- (laughter) -- this independence and separate identity. So I think that -- there will always be opponents in Canada, but I think that is a real minority view now.

I think the resistance to this kind of thing's far more in the United States than in Canada, for reasons that -- and maybe, Bob and others, for reasons you would better fathom than me. 

Some of it's post-9/11 security concerns, but I've never seen -- the United States in the past decade is -- the sensitivity here about sovereignty and the negative assessments I often read of NAFTA -- completely counterfactual assessments of NAFTA -- I think, are the real barriers. I think the real barrier to making some of these arrangements broader and more systemic in terms of the integration are actually on this side of the border.

TPP Backup Plan? Zoellick, Looking to NAFTA's Success, Pushes an Americas U.S. Trade Agenda for the United State

Zoellick to policy-makers:  "North America can become a new raising power" if the U.S. adopts the right trade approach.  

Former World Bank President Robert Zoellick (and, most recently, head Mitt Romney's national security transition team) pushes an Americas trading block to secure America’s future economic growth, looking to build on the extensive ties between the United States, Canada, and Mexico as a starting block to push closer U.S. trade ties to Brazil.

Could this be Zoellick pushing a back-up plan for the White House should Trans-Pacific Partnership talks falter or delay?

And, before we delve into a condensed summary of the op-ed, could Zoellick's "Americas trade vision" be merged with the in-sourcing phenomenon reported so superbly in Charles Fishman's Atlantic article The Insourcing Boom?

From Zoellick's WaPo editorial:

This is an excellent time to deepen ties. The NAFTA countries should invest in a North American community that would make each stronger at home and around the world. For the United States, a more prosperous, growing, populous, integrated, energy-secure and democratic continental base would enhance private-sector possibilities and national power.

…

North America should work to better connect the trade, sourcing and supply chains in the Americas — and act with hemispheric partners on the next generation of development issues: investment, infrastructure, education, energy, the environment, service sectors, business facilitation, or even democracy and security. 

These Latin American partners can also help shape ideas around the world during a time of great fluidity. Chile, Peru, Colombia and Mexico — all U.S. FTA partners—have created a new Pacific group that is advancing policies for open economies. They can be U.S. friends in a changing Asia-Pacific system, too.

U.S. ties with Brazil are not part of this FTA framework. Yet the current governors of Brazil’s states seem inclined to pursue more interests with the United States, including on energy, inclusive development and democracy. By combining activities with Brazil and partnerships across the hemisphere, the United States could set the stage for economic and security ties among all American democracies.

As the president looks west across the Pacific and is pulled to the Mideast, he also needs a fresh north-south vision. North America can become a new rising power. And the foundation of the future global system can be “Made in the Americas.”

Will Trans-Pacific Partnership Talks Update or Downgrade NAFTA?

By Keith Edmund White, Editor-in-Chief

New Zealand's trade minister thinks Trans-Pacific Partnership (TPP) trade talks could be a springboard for opening up NAFTA.  Is he right?  CUSLI-Nexus looks at how TPP talks could update NAFTA, but then asks the tough trade question:  do bilateral and regional free trade agreements help international trade, or do they just kick the can on the big divides within the international trading system?  Thanks to iPolitics, Rabble.ca, Skynews.com.au, and Tax-News.com from their excellent reporting that stretches from Toronto to Singapore.

On Monday, New Zealand’s trade minister—at a convention hosted by the Canadian Council of Chief Executives—“said the TPP [Trans-Pacific Partnership] talks could allow negotiators for Canada, the United States and Mexico to update the 18-year old NAFTA deal.”

How would TPP update NAFTA?  From an excellent iPolitics report by Elizabeth Thompson:

In an interview with iPolitics following his speech, [NZ trade minister Tim] Groser said changes to NAFTA wouldn’t be part of the formal TPP agenda but the TPP agreement could trump NAFTA provisions the same way NAFTA superceded the original Canada-U.S. free trade deal.

So what is there to update in NAFTA? U.S. chicken and dairy sectors want more access to the Canadian market, with other U.S. industries wanting to keep pushing Canada on strengthening their intellectual property regime. From a Rabble.ca Wednesday article reviewing the lingering Canada-U.S. trade barriers in the NAFTA-era:

U.S. industry groups, including the main poultry and dairy associations, complained about Canada's supply management policies and intellectual property regime during a Monday hearing at the United States Trade Representative on Canada's entry to the ongoing Trans-Pacific Partnership trade negotiations. Meanwhile, in its presentation to the USTR, the AFL-CIO urged the U.S. government to incorporate "a new approach to trade policy, one that prioritizes benefits for working families, not simply benefits for multi-national or global enterprises (MNEs)."

Reuters reported Monday that the U.S. dairy and chicken sectors are sore they never received access to Canada's market as promised in NAFTA. High tariff walls and low quotas prevent exports of these goods from any country from flooding the Canadian market, which is supplied mainly by Canadian farmers and farm production.

Now getting a TPP agreement is by no means a sure thing.  From an excellent article in today’s SkyNews.com.au emphasizing that 2013 will be the make-or-break year for TPP:

While it's believed around half of the TPP's 29 chapters are finished, Australian Trade Minister Craig Emerson concedes most of the low-hanging fruit has been picked.

'It'll be 2013 when the big negotiations on the hard issues are conducted,' Emerson told AAP on the sidelines of the APEC Summit in Russia this month.

Emerson points to market access as the toughest nut to crack.

And, of course, what about the macro-question:  Do ‘small’ regional trade pacts or possibly ‘big’ regional trade pacts like TPP good or bad for encouraging a free-flow of trade world-wide?  From this there’s perhaps no better—if perhaps biased—source than Pascal Lamy, the Director General of the World Trade Organization (from today’s Tax-News.com):

While noting that the increased negotiation of regional trade agreements has contributed to freer trade, he drew attention to the fact that regional trade agreements have sprung up due to an impasse in global free trade talks under the auspices of the Doha Development Agenda.

He reiterated that on average, each member of the WTO belongs to no fewer than 13 separate preferential trade agreements. "This means that in addition to their multilateral commitments, WTO members on average have to manage an additional 13 separate trade regimes. I do not think you will disagree with me that this cannot be the most efficient way to trade and to do business across national frontiers."

In addition, Lamy—talking at a Singapore event hosted by the European Chamber of Commerce—lists five drawbacks of pursuing free trade agreements (FTAs) on a bilateral and regional level, skipping over WTO talks:

• FTAs create trade costs:  multiple, overlapping trade pacts create their own trade costs.

• New FTAs undermine old FTAs.  Newer FTAs-instead of building on past ones--lower of the value of existing trade pacts.

• The FTA box-out factor:  If you’re not in the FTA club, the FTA is—in effect—now a trade barrier to non-members.

• FTAs reward procrastination:  Countries are selectively picking how to pursue free trade, skipping over tougher issues, which mainly impact smaller, weaker members of the world trading system.

• FTAs Undermine WTO consensus:  the more bilateral and regional FTAs you make, the harder it can be to get countries to agree to world-wide agreements on trade.

Naturally, there's an easy rejoinder these concerns:  let's have freer trade where we can have it. 

In any case, international trade may be the big, under-reported story of 2013.  And it will be interesting to see if TPP can be finalized, and what impact a finalized TPP agreement--a trans-Pacific trade pact that would exclude China--might have on trade disputes between China and the United States, and--from that--on divisions at the WTO.

Accessing the Impact of Jack Layton’s Death on the Newly Empowered NDP and What Does Having this Party as Official Opposition Mean to Canada-US Relations?

By Erwin Braich
Staff Writer

Before becoming Prime Minister, in a speech to the conservative American think-tank Council of National Policy, Stephen Harper described Canada’s New Democratic Party (NDP), in the following way, “basically a party of liberal Democrats, but it's actually worse than that, I have to say. And forgive me jesting again, but the NDP is kind of proof that the Devil lives and interferes in the affairs of men.”[1] Since its founding in the early 1970s, this unapologetic left-leaning party Harper seems to scorn, has been an integral part of the Canadian political order. In fact, it was the NDP’s first leader Tommy Douglas who introduced universal healthcare, something that today you cannot leave out in the very first sentences describing Canada. More recently, the party was led from 2003 until this past summer by Jack Layton. Throughout his tenure, Layton passionately promoted his party’s principles while at the same time attracting more voters.[2] His savvy leadership translated to huge political gain for the NDP. In the federal election this past spring they surprised everyone. Layton was able to secure 103 seats for his party, and even oversaw a massive victory in Quebec, a place that the NDP had never even attempted to contend in.[3] Ultimately, Layton’s party leadership led to the utter collapse of one party (Bloc Quebecois) and the taking of the throne for Canada’s center-left spotlight, from the other (Liberals). But tragically, as the nation’s political scene was being reshaped by the emergence of the NDP as the Official Opposition, Layton succumbed to cancer in August. Which leads to the question: who will get behind the wheel of this reinvigorated political party? And in what direction will they steer Canada’s New Democrats?

There is no doubt Layton will be missed. Across Canada, only one-in-five think the NDP will be able to find a new leader as strong as Layton, while two thirds (66%) of Canadians disagree.[4] As of now, long-time NDP strategist Brian Topp is the sole registered leadership candidate, which will be formally decided at the party’s convention in 2012.[5] He has a stance on every Canadian hot-button issue such as advocating Canada must formally recognize Palestinian statehood, to being vehemently opposed to the Keystone XL oil pipeline project linking Alberta to the Gulf Coast.[6] Other potential candidates exist, among them Quebec MP, Thomas Muclair who gains popularity day by day. According to a poll released last week 28 percent of Canadians would vote NDP if Muclair is chosen to be the party’s leader, while 25 percent who would vote NDP if Topp is chosen.[7]

There is an important side note for any American observing the NDP leadership race. Canada has extremely tight campaign finance laws. Under the new rules, the maximum contribution an individual supporting one of these candidates can contribute is $1,200, but the NDP has instituted an internal policy that reduces this to a mere $1,000.[8] Also under Canadian law, corporations and other businesses are completely prohibited from contributing altogether. Needless to say, this is a vastly different campaign finance regulatory structure than seen in the United States.

So how will this impact the party’s effectiveness as Official Opposition? For one, it is the first time in history the NDP has held this position. So, if you combine this with the fact that they entered this Parliamentary session without real leadership, at first glance things can look somewhat unpredictable for the party. However, the NDP is now the sole voice coming from the political left in Ottawa. Given the huge blow dealt to the more centrist Liberals, (the Official Opposition for the previous five years) we can be sure that Harper’s Conservative government is going to be contested with more passion than ever before. Yet one thing to keep in mind is that any effectiveness is going to be tempered, because at the end of the day, the Conservatives have a majority government. In Canada it is only in extreme cases that an MP votes against his party. That said, any Opposition party’s role in a majority government will be more-so to stimulate public debate while waiting for the next election rather than directly affecting policy outcomes.  

            What could the NDP being the Official Opposition mean for US-Canada relations? Let’s be honest, the party has never been particularly friendly with the US. Expect Parliamentary debate to be reflective of this. The NDP have historically been known as the “anti-American” party extremely skeptical of American power. At one point they even called for Canada to pull out of NATO, because of their suspicion of American intentions.[9] And just this week NDP Immigration Critic (the formal Opposition “shadow” position to the Immigration Minister) MP Don Davies, called for Canada to ban former Vice President Dick Cheney from entering Canada for a scheduled speaking engagement, because of his role in the Bush administration.[10] While the Opposition’s current Foreign Affairs Critic, NDP MP Paul Dewar (another possible leadership candidate) has made clear that his party will closely examine any perimeter security cooperation between Canada and the US. [11] Alexander Moens, writing in the Fraser Institute’s most recent report on Canada-US relations, blames Canadian nationalist sentiment and specifically the NDP for creating what he terms the “political albatross” preventing progress on the Prosperity and Security agreement.[12] During Layton’s campaigning in 2011 he reiterated the NDP stance on Canada’s involvement in Afghanistan. He spoke on numerous occasions about how the party has been strongly in favor of bringing Canadian troops home since 2006 and immediately ending the military mission altogether.[13] The Conservatives on the other hand, are more in line with Obama’s plans of scaled down perseverance in Afghanistan. On every occasion the NDP has almost automatically opposed Canadian cooperation with the United States. We can anticipate that the NDP will be quick to challenge the Prime Minister on everything he decides to do regarding relations with the US. This is not only because it is the role of any Opposition to be the proverbial thorn in the governing party’s side, but also because there could not be more diametrically opposite sets of beliefs regarding Canada-US relations in Parliament.

Yet there is hope that things could gradually warm up between the Opposition Party and their stance towards the Americans. With the NDP’s new foothold in Quebec, they will now have to appeal to that province’s voters, who have historically been somewhat more supportive of Canada-US cooperation. Actually, amongst English-speaking Canadians, it is a well-known joke that when in Quebec, you will be treated more warmly if you tell them you are American rather than from another province. And from a policy standpoint they have always been Canada’s exception. One pertinent example is with regard to trade. In 1993, the NDP (and frankly most Canadians) had been staunchly against Canada’s commitment to NAFTA, but the opposition to the free-trade agreement was remarkable lower in Quebec where almost half of the population actually supported it.[14] This illustration is particularly germane to today, because the NDP under Layton’s leadership had advocated completely renegotiating the trade agreement. So might there be a chance the newly the acquired Quebecers lessen the party’s disdain towards the free trade pact? It is on key Canada-US issues like these, in which the new leader will have to balance traditional party positions with the interest of maintaining support in their newly conquered province.

Ultimately, Jack Layton’s legacy will be reflected by the strong position in which he left his party. As Official Opposition the NDP are going to be effective as determined critics of any move Harper’s Conservatives make, and at least for the meantime this critical voice should be at its loudest when it comes to Canada-US relations.

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[1] Text of Stephen Harper's speech to the Council for National Policy, June 1997 http://www.cbc.ca/canadavotes2006/leadersparties/harper_speech.html

[2] Ian Austen, New York Times http://www.nytimes.com/2011/08/23/world/americas/23canada.html

[3] 2011 Federal Election Results http://www.sfu.ca/~aheard/elections/results.html

[4] Angus-Reid Poll http://www.angus-reid.com/polls/43998/canadians-remember-layton-fondly-support-state-funeral-to-honour-him/

[5] NDP Party Website http://www.ndp.ca/leadership-2012

[6] Brian Topp, Globe and Mail http://www.theglobeandmail.com/news/politics/second-reading/brian-topp/

[7] Joanna Smith, Toronto Star http://www.thestar.com/news/canada/politics/article/1058971--ndp-would-do-best-under-mulcair-poll-finds?bn=1

[8] Elections Canada http://www.elections.ca/content.aspx?section=pol&document=index&dir=lim&lang=e

[9] John Ibittson, Globe and Mail http://m.theglobeandmail.com/news/politics/ndp-foreign-defence-policy-differs-from-tories-in-style-more-than-substance/article2036769/?service=mobile

[10] Canadian Press Release, http://www.huffingtonpost.ca/2011/09/26/dick-cheney-canada-visit-ndp-ban-bar-don-davies_n_980609.html

[11] John Ibittson, http://m.theglobeandmail.com/news/politics/ndp-foreign-defence-policy-differs-from-tories-in-style-more-than-substance/article2036769/?service=mobile

[12] Alexander Moans, “Skating on Thin Ice: Canadian-American Relations in 2010 and 2011” p. 26 [Google Books] http://books.google.com/books?hl=en&lr=&id=mBLlGi0kAakC

[13] NDP Party Website http://www.ndp.ca/press/canadian-leadership-in-afghanistan

[14]Guy Lapachelle, “Quebec under free trade: making public policy in North America” p. 255 [Google Books]

http://books.google.com/books?id=E40tHMkPlUkC