Canada, U.S. security partnership key to growth

by Bryan Salvage
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VANCOUVER, BRITISH COLUMBIA – To establish trading ties and secure Canada's long-term economic interests, Canada must formulate a unified, single-security strategy with the United States, according to a new study by the Fraser Institute, Canada's leading public policy think-tank.

Establishing a unified security regime between the two countries would create a more positive Canada-U.S. political atmosphere after a decade of unsteady relations between the two countries, said Alexander Moens, Fraser Institute senior fellow and author of the report, “Skating on Thin Ice: Canadian-American Relations in 2010 and 2011.”

"Gaining unimpeded access to the U.S. market for Canadian exports and imports remains Canada's top economic interest," Mr. Moens said. "A security deal between the two countries would make Americans more receptive to increased trade, investment, and tourism in Canada."

The study singles out what it calls “American protectionism”, costly border delays, carbon levies, declining gas exports, a strong Canadian dollar, weaker American demand and persistently lower Canadian productivity rates as factors that have hampered growth in trade with the U.S. These hurdles have compounded the already strained trade relationship between the two countries, which has grown increasingly difficult due to post-9-11 border changes and, more recently, the global economic downturn.

Establishing a unified security regime between Canada and the U.S. would pave the way for deeper trade integration including regulatory harmonization, common external tariffs on manufactured products, free trade in agricultural products and an overall energy and environmental accord, where existing policies are hampering economic integration, the study said.

The report makes several specific recommendations concerning trade, security, and environmental regulations including:

* Canada should propose a single-standards regime and bi-national inspection regime in the cattle and hog industries and agree on national (single-market) treatment for Canadian and American beef and pork products, exempting these from Country-of-Origin-Labeling (C.O.O.L.) standards.

* Canada must avoid carbon regulations that simply slow down growth. Rather, governments need to create the right incentives to encourage oil exploration and energy efficiency.

* Despite pressure from environmental groups and opposition parties to launch standalone Canadian targets for greenhouse-gas reductions, the Canadian government's plans to begin defining a cap-and-trade system by means of the Canadian Environmental Protection Act should not proceed ahead of any U.S. action.

Mr. Moens said the best Canadian policy on carbon emissions is caution and delay: caution, because the public-policy issue of global warming may not be supported as strongly as its early advocates projected; and delay, because the American political agenda limiting carbon emissions is in flux. Canada should not commit itself to higher targets for reductions in carbon emissions than the U.S. or finalize them until the American targets are clear and decided.

A “silver lining” in the cloud hanging over Canada-U.S. relations, however, can be found in the agreement on government procurement President Obama and Prime Minister Stephen Harper announced in early February 2010, Mr. Moens concluded.

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