Canada-US trade: Much ado about labelling

Canada should punish the U.S. over labelling, but does it justify a trade war?
COLIN ROBERTSON
Special to The Globe and Mail Published Friday, May 17 2013,
What’s in a label? In the case of Canada’s export of cattle and hogs, constrained by the impact of U.S. country-of-origin labeling (COOL), about $1-billion in potential retaliation.
It is a scenario that we need to avoid.
The May 23 deadline is fast approaching for U.S. compliance with a World Trade Organization (WTO) ruling that found U.S. labelling laws constitute an unfair trade barrier.
Unless the U.S. makes changes, Canada (and Mexico) will seek authorization to take retaliatory trade action. In our case, this is estimated at a billion dollars on U.S. products coming into Canada.
Today, especially in the case of commerce with the United States, we don’t so much trade as make things together ranging from soup to cereal and especially in the case of trains, planes and automobiles.
Beef and pork products aren’t that much different.
We breed weanlings in Manitoba and truck them south to fatten on Iowa corn. Heifers born in Wyoming are shipped to Alberta’s feedlot alley, then back across the border for slaughter in Washington state, Colorado or Nebraska. Some of the cuts return for sale in Canada, making us America’s top market for beef exports.
It works well unless you are a pig farmer in North Dakota or a rancher in Montana imagining your profit margin erode as Canadian competition is trucked south.
Like most trade disputes, COOL has elements of both high policy and low politics.
At first glance, the case for country labelling seems reasonable. Why shouldn’t consumers know what they’re eating and from where it came, especially with tales of toxic toys and tainted dog food from China? And why can’t we turn Canadian produce into a premium brand like Kobe beef or New Zealand lamb?
The problem is labelling.
A cow is processed into 300 different bits. Think of 3000 or 5000 cattle – a day’s slaughter in some packing houses – as though they were packs of cards and then separate them from deuce to ace for labelling purposes. For products like ground beef and sausages it is an impossible task.
To avoid this, packing plants will ‘Buy America,’ even though cutting off the Canadian supply will cost jobs in feed yards and perhaps shutter some U.S. slaughter houses.
Over the last decade – WTO trade litigation moves glacially – Canada and Mexico argued that the U.S. action constitutes an unfair trade practice. We won, but the U.S. Congress, in refusing to amend the original farm legislation, has put the Obama Administration in a tough spot. It needs to craft a way forward by May 23 that satisfies both U.S. law and the WTO ruling.
For now, in tandem with Mexico and our U.S. allies, we will push the U.S. to achieve a legislative fix through Congress, perhaps when the Farm Bill comes up for renewal this fall.
At the same time, we will develop and then submit to the WTO those goods on which we will seek to apply retaliatory tariffs. This process will take months.
Developing a list of U.S. goods to impose retaliatory duties is hard. What can we choose that won’t potentially damage Canadian consumers and manufacturers? So much of what we produce we make together.
Throw in the additional complication of targeting our list to have maximum impact on constituents of the dozen or so members of Congress behind COOL. But we can’t make it personal. An adversary on one file is an ally on the next.
We’ve been through retaliatory process over softwood lumber. After much effort – consultations with the provinces and industry – we put a duty on aquarium fish imported from the U.S. It was an elephantine process that gave birth to a minnow.
We have right on our side, but does it justify a trade war? A billion dollars is about half a day’s trade in what continues to be the world’s biggest bilateral trading relationship. Our agricultural trade is estimated at $38-billion annually.
As for the U.S., how does this help President Obama to double U.S. exports as part of his jobs recovery prescription? How does antagonizing the next-door neighbours secure a Trans-Pacific Partnership designed to renovate the NAFTA?
COOL comes at a time when we are deep into efforts to both ease passage for goods, people and services at the border and to eliminate silly regulatory differences. When we are done we will have set, once again, the standard for innovative trade negotiation.
The dispute does underline the need to develop alternative markets. It’s another reason to hang tough in the European trade deal negotiations around better access for our pork and beef.

Meantime, there is a ‘cow pie’ called COOL. Let’s figure this one out.

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Colin Robertson, May 17th 2013 | Tags: , , , , , , , , , ,
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On Shipbullding & Sovereignty and the Royal Canadian Navy

Canada’s shipbuilding program is too important to run aground on poor planning

Colin Robertson

Special to The Globe and Mail

Published Wednesday, May. 08 2013, 7:18 AM EDT

Will we ever see steel cut on our promised new fleet of Arctic patrol craft and new warships for the Royal Canadian Navy?

Yes, but it will require continuing political will in holding to schedules and budgets and resolve in the face of relentless criticism.

Reports about the high cost for the design of the Arctic patrol craft come on the heels of the Parliamentary Budget Office warning that the new Navy supply ships are over budget and behind schedule. The Auditor General has announced he will investigate the entire procurement process.The bite of austerity also threatens that we will end up with both less ship and fewer ships.

With memories still fresh of the F-35 controversy, the government is seeking third-party expertise for the shipbuilding exercise.

It will need it if the multi-billion dollar project, designed to provide us with a new Navy and to re-create a Canadian shipbuilding industry, is to beat back the bean counters.

With three oceans at our back and the longest coastline in the world, Prime Minister Stephen Harper has said that Canada and its economy “float on salt water.” On any given day, one third of Canadian Tire’s inventory is at sea.

Our maritime interests fall into two baskets: advancing international law as surety for our sovereignty and preserving the freedom of the seas for our trade and commerce. Negotiation of the United Nations Convention on Law of the Sea is one of the greatest triumphs of Canadian diplomacy. Canadian jurisdiction was extended to the continental shelf, effectively doubling our ocean estate.

With 40 per cent of our landmass in our northern territories, and 25 per cent of the global Arctic, securing international recognition for Canada’s extended continental shelf is a priority. Later this month we retake the chair of the Arctic Council, although we still need to explicitly spell out how we will advance this agenda.

Our ability to enforce the law and guarantee safe passage depends on naval power.

For the last two centuries first the Royal Navy and then the United States Navy have preserved maritime order and secured our sea-lanes. Austerity and fiscal constraint is now straining the U.S. capacity and they have called on the Alliance to share the burden.

We need to do our part for reasons of self-interest and collective security.

Piracy, and the trafficking of guns, drugs and people, last year cost the global economy more than $6-billion. Our warships are part of the international force in the Persian Gulf actively stopping piracy. Last November, HMCS Ottawa participated in a major drug interdiction off the east coast of Costa Rica that netted more than 1,000 kilos of narcotics.

Our Halifax-class frigates are being refurbished and, after a troubled refit, all four of our Victoria-class submarines will soon be at sea.

But we need our new ships.

Made-in-Canada ships will cost more than buying off-the-shelf because the goal is to recreate a Canadian shipbuilding industry. The Jenkins Report argues that we can leverage our shipbuilding to develop key industrial capabilities.

Our model should be the revitalized Canadian aerospace industry. Ranked fifth in the world in overall aerospace production, it is third in civil aircraft production and is well integrated in global value chains.

But creating a world-class shipbuilding industry won’t be easy.

Much of the success of our aviation industry, as well as our resurrected auto industry, is because they are part of a North American integrated market. This is not the case for shipbuilding because the U.S., through its Jones Act, requires all U.S. internal shipping to be carried by U.S. ships built in the United States. This unabashedly protectionist legislation should be one of our prime targets in the Trans-Pacific Partnership trade negotiations.

Seventy years ago, we were a central part of the Allied effort to win the Battle of the Atlantic. At the beginning of the war we possessed six warships and a complement of 3500.

Our shipyards employed more than 125,000 workers and built more than 4,000 vessels. Merchant ships were constructed in an average of 307 days.

Our warships and the more than 25,000 merchantmen that they escorted across the Atlantic were Britain’s lifeline. Winston Churchill would describe the Battle of the Atlantic as the “dominating factor all through the war…everything happening elsewhere, on land, at sea or in the air depended ultimately on its outcome.”

At war’s end the Royal Canadian Navy was the world’s third-largest, with a complement of 95,000 sailors and 270 warships. Today, our complement is less than 14,000 with 33 warships. We rank well back, even behind the Turks, Indonesians and Greeks. Yet our economy, increasingly, floats on salt water.

Let us keep faith with the sailors and shipyards that won the Battle of the Atlantic. Our national interest requires a strong Navy backed by a muscular shipbuilding industry.

A former diplomat, Colin Robertson is vice-president of the Canadian Defence and Foreign Affairs Institute and (Hon.) Captain, Royal Canadian Navy.

http://www.theglobeandmail.com/commentary/canadas-shipbuilding-program-is-too-important-to-run-aground-on-poor-planning/article11778104/#dashboard/follows/

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Colin Robertson, May 8th 2013 | Tags: , , , , , ,
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Border fees

Border crossing fee a bad idea

Proposal by U.S.
to recoup security costs would simply create more obstacles at border
A proposal being floated by the United States to hit travellers with a new crossing fee at U.S. land border crossings is, not surprisingly, coming under attack on both sides of the 49th parallel.
The new levy is being proposed as a way to help the cash-strapped U.S. cover increased security costs. But the problems it will cause – not to mention the bad PR with Canadians who travel to the U.S. for either business or pleasure – is going to make any such fee more trouble than it’s worth.
As the executive director of the Canadian Snowbird Association and its 70,000 members suggested in a Canadian Press story in Tuesday’s Herald, U.S. officials are reaching into Canadians’ pockets in their effort to ease the country’s financial plight.
“While we appreciate the fiscal challenges faced by our friends in the United States, we would prefer the U.S. government focus on ways to reduce obstacles at the border that hinder trade and tourism,” said Michael MacKenzie. “People feel like maybe they’re being nickel and dimed a little bit and politicians are taxing people who can’t vote, which makes sense politically but it just sends the wrong message.”
Air passengers already pay a fee to enter the U.S. but it is included in the price of the plane ticket. Hitting up travellers crossing the border by land presents a greater logistical problem. There are an estimated 140,000 vehicles and 400,000 people traversing the Canada-U.S. border every day, accounting for roughly $1.6 billion in trade daily between the two countries. Throwing an extra fee into the mix would cause delays when the focus should be on reducing obstacles to cross-border traffic, not creating new ones.
As a commentary piece by Colin Robertson in Wednesday’s Globe and Mail asked, “Does the U.S. really want to slow down traffic and turn the border agents into toll collectors when their primary task is to look for bad guys?”
The answer, of course, is no, not if they’re smart.
The Canadian Chamber of Commerce says the proposed fee would be a “serious mistake” and is promising to lobby against the proposal.
“Any fee on travellers crossing the border is bad for individuals and for the economy,” the chamber said.
The U.S. government might not be concerned about a fee being bad for individuals, but it might want to think again before doing something that will hurt the economy. Such an outcome would ultimately come back to bite Washington in the pocket by eroding any fiscal gains from the new fee.
Newton’s Third Law of Motion refers to an action creating an equal and opposite reaction. In this case, putting into motion a new crossing fee on land travellers would surely produce a negative reaction. In fact, the mere suggestion already has.

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Colin Robertson, April 25th 2013 | Tags: ,
Posted in op-ed

Border tolls, Windsor-Detroit Bridge, Digital Diplomacy

A border-crossing fee is exactly what the U.S. and Canada do not need

Colin Robertson  Special to The Globe and Mail Wednesday, Apr. 24 2013

Margaret Atwood once remarked that if the national mental illness of the United States is megalomania, that of Canada is paranoid schizophrenia.

But is paranoia towards the United States justified? Not usually. Take a closer look at reports of a new border-crossing fee that are creating a lot of noise.

This is not protectionism. Rather, the across-the-board budget cuts mandated by U.S. laws (the “sequester”) have obliged all departments to become more creative in funding. Within the 2014 Department of Homeland Security budget is a recommendation to conduct a study on whether to collect a fee from pedestrians and vehicles crossing between the United States and Canada by land.

The new revenue, Secretary Janet Napolitano told Congress, would pay for the hiring of new customs and border officers. There might be something for us in the scheme as without new staff, the chances of getting pre-clearance at Toronto’s Island Airport are slim. But the first call will be to staff the southern border because enforcement will be a key part of any new immigration deal.

Unlike budgets in Canada, however, what goes into the congressional legislative process bears little resemblance to what comes out the other end. This is why the U.S. legislative process has famously been compared to sausage-making.

The checks and balances inherent in the U.S. system mean that regional and sectoral interests can also be counted on to block such initiatives.

A new toll “is the absolute last thing we should be doing if we want to grow the economies of Western New York and the U.S.,” warned Buffalo Congressman Brian Higgins. “To slap travellers here with onerous fees is a bad idea,” argued New York Senator Chuck Schumer. “We don’t need a study to tell us that.”

There is also the practical problem.

An estimated 400,000 people and 140,000 cars cross our border daily. Does the U.S. really want to slow down traffic and turn the border agents into toll collectors when their primary task is to look for bad guys?

We need to distinguish between what is noise – the Homeland Security proposal – and what is important.

What is important is that the biggest infrastructure project at our largest border gateway – the new Detroit-Windsor bridge – was recently given a Presidential permit with the backing of nine D.C. agencies.

The bridge odyssey has taken 14 years and constant effort by our Detroit consulate and the Ontario and Canadian governments. We are fronting a half-billion dollars for its construction, which is also the estimated daily value of the goods that cross this vital gateway. There will be more bumps before the traffic flows, but we are at the beginning of the end.

The lesson we can draw from both the DHS kerfuffle and the bridge saga is that we need to wage a permanent campaign in the United States on behalf of Canadian interests.

We need a thousand points of contact to complement our embassy and our consulates. This means taking our game to the States because by the time a problem reaches Congress we are fire-fighting.

Recent budget paring in Canada has reduced our consulates in the United States to fifteen. Yet, what we need is representation in every state. We can do it, within budget, by doing diplomacy differently.

Recruit talent from the Canadian expatriates who are already living in each state. Let them practice digital-age diplomacy. Drop the black tie for a BlackBerry and a working knowledge of new media.

With some exceptions – our embassy’s prime location on Pennsylvania Avenue is crucial, and the Los Angeles consul-general’s residence is a second home for Canada’s entertainment industry – these diplomats can work from their homes or incubator offices to spot opportunities for trade and investment.

As U.S. Ambassador David Jacobson repeatedly reminds us, the most important thing the United States can do to help the Canadian economy is to get the U.S. economy back on track. For 35 American states, their principal export market is Canada.

This trade supports nearly eight million U.S. jobs, a fact not lost on President Barack Obama, who has promised to ‘export’ the U.S. back into prosperity. Last year U.S. exports to Canada exceeded total U.S. exports to China, Japan, South Korea and Singapore combined.

Canadian exports to the United States were almost three times greater than our combined total to the rest of the world. Trade with the United States represents almost half of our GDP.

A half century ago, Minister of Trade and Industry George Hees encouraged members of Canada’s Trade Commissioner Service to ‘bust your ass’ for Canada. The instruction stands.

A former diplomat, Colin Robertson is senior advisor to McKenna, Long and Aldridge LLP and vice president of the Canadian Defence and Foreign Affairs Institute.

UPDATE:

Sen. Leahy wins ban on border fee as Senate Judiciary marks up immigration bill

Posted on May 9, 2013 by Nancy Remsen

Here’s the latest from Sen. Patrick Leahy, D-Vt., on the immigration bill being worked on in the Senate Judiciary Committee.
A news release from his office reads as follows:

On a bipartisan voice vote, Thursday approved legislation authored by Chairman Patrick Leahy (D-Vt.) and cosponsored by Sen. John Cornyn (R-Texas) that blocks the creation of a land border crossing fee.

The amendment was Leahy’s first to file and be offered to the Border Security, Economic Opportunity and Immigration Modernization Act, which the Judiciary Committee is currently considering. The amendment responds to a request by the Department of Homeland Security (DHS) in the Obama Administration’s budget to study charging admission for pedestrians and passenger vehicles crossing land borders into the United States.

Leahy, who represents one of the ten states that border Canada, said such a fee would deflate thriving commerce that is important to all the Northern Border states, and it would limit cultural interchange.

“Canada is the United States’ number one trading partner. Some 300,000 Canadians cross into our country every day and spend nearly $235 million,” said Leahy, who earlier this week released a guest column on the issue. “Our nation has always had strong cultural and commercial ties to our neighboring countries, and my amendment would protect these important relationships.”

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Colin Robertson, April 24th 2013 | Tags: , , , , , , , , , ,
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Canada, North Korea and Ballistic Missile Defence

North Korea’s threats show that Canada needs to be part of U.S. missile defence pact

Special to The Globe and Mail Published Wednesday, Apr. 03 2013, 9:27 AM EDT

(see also Andy Radia’s Canada Politics report and CTV report on Minister Toews  Question Period interview .)

Canadian prime ministers have three files with a permanent place on their desks: national security, national unity and the U.S. relationship. When those files intersect, they require special attention.

Sooner rather than later, Prime Minister Stephen Harper is going to reconsider the Canadian decision to stay out of Ballistic Missile Defence.

The catalyst is North Korea.

Kim Jong-Un is the third in his family to lead the Hermit Kingdom, and this month has all but declared war – including threats to target North America. Normally, sabre rattling by tinpot dictators can be managed or contained. But not when the sabres are ballistic missiles.

“Nuclear threats are not a game,” United Nations Secretary-General Ban Ki-moon warned on Tuesday: “Aggressive rhetoric and military posturing only result in counter-actions, and fuel fear and instability.”

Coupled with the improvements that Iran is making to its own ballistic missile capacity, the threat to North America is now clear and present. The United States has moved aircraft and warships to the area and announced that it will increase its ground-based interceptors in California and Alaska.

Canada has a conflicted history when it comes to nuclear weapons and domestic defence from them. Though we were present at the creation – nuclear-energy research during the Second World War in Canada was vital – we eschewed the development of nuclear arms for ourselves. Instead, we opted to develop nuclear power for peaceful purposes through the CANDU reactor.  (We were later deceived by the Indians, who developed their own nuclear weaponry using plutonium derived from a research reactor provided by Canada.)

Placement of nuclear warheads on Canadian soil, as part of our alliance commitment, tormented John Diefenbaker and the resulting BOMARC controversy contributed to his government’s undoing. Lester B. Pearson, who succeeded Mr. Diefenbaker as prime minister, faced similar dissent but concluded that our obligations to NORAD and NATO required participation. Mr. Pearson, who had won the Nobel Peace Prize over the Suez crisis, was derisively labelled the ‘defrocked prince of peace’ by a young Pierre Trudeau.

Two decades later, prime minister Trudeau faced similar divisions in his own cabinet over testing of cruise missiles on Canadian soil. Mr. Trudeau allowed the testing, arguing that “it is hardly fair to rely on the Americans to protect the West, but to refuse to lend them a hand when the going gets rough.”

In good company (with Australia, France et al), prime minister Brian Mulroney rejected participation in the U.S. “Star Wars” missile-defence program because Canada “would not be able to call the shots.”

When Ballistic Missile Defence was developed under George W. Bush, prime minister Paul Martin opted out, to the confusion of his new defence chief and ambassador to the United States, both of whom thought that he was going to sign on.

A divided Liberal caucus, especially the opposition from Quebec, had helped change Mr. Martin’s mind.

Mr. Bush was advised that newly-elected Prime Minister Stephen Harper would not welcome a renewed request. Mr. Bush found this puzzling, reportedly asking what would happen if a North Korean missile, aimed at Los Angeles or Seattle, wound up heading towards Vancouver or Calgary.

The rest of the alliance, as well as Australia, Japan and South Korea, have signed onto missile defence. The Israelis’ Iron Dome recently demonstrated the defensive worth of anti-missile technology.

Critics see Ballistic Missile Defence as a latter-day Maginot Line – costly, unreliable, and provocative. If you want to detonate a nuclear bomb in the United States you would not send it by missile. NORAD, they argue, provides sufficient defence. But continental defence has been integral to Canadian national security since MacKenzie King and Franklin Roosevelt parleyed at Kingston in 1938. We were architects of NATO because of our belief in collective security.

The U.S. defence umbrella has guaranteed the peace since 1945, and has coincided with the greatest growth in trade in world history. Canada has been a principal beneficiary, with marginal premiums. Some Canadians, wrote Mr. Trudeau during the cruise missile debate, “are eager to take refuge under the U.S. umbrella, but don’t want to help hold it.”

Membership in the alliance entails obligations. But it also brings great benefits that serve our national interests.

Incorporating our satellite and land-based tracking facilities into Ballistic Missile Defence could make a difference in shielding Canadians should the missiles be launched. A Senate report in 2006 concluded that an effective BMD “could save hundreds of thousands of Canadian lives.”

Protecting Canadians (and Americans) was the logic of the original DEW line and NORAD, our bi-national aerospace defence agreement that has served us since 1958 and now includes aspects of maritime defence.

Last summer, ministers John Baird and Peter McKay prepared a memorandum for Mr. Harper presenting Ballistic Missile Defence options. The Prime Minister decided the timing was not right. Circumstances have changed. BMD should now be incorporated into our ‘Canada First’ defence strategy.

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Colin Robertson, April 3rd 2013 | Tags: , , , , , , , , , , , ,
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BRICS Summit in Durban

Once-poor BRICS countries are preparing a better future without us

COLIN ROBERTSON The Globe and Mail

Published Wednesday, Mar. 27 2013

On Wednesday, the leaders of the increasingly powerful group of countries known as BRICS – Brazil, Russia, India, China and South Africa – will meet for their fifth summit in Durban.

At the top of the BRICS agenda will be serious efforts to alleviate poverty and secure greater weight as newly emerging powers – both of which the five countries seem ready and able to do without any help from the West, using a new set of financial institutions they hope to create.

Setting the tone for the meeting, Xi Jinping of China, who is making his international debut as part of a trip that has taken him to Moscow and then Dar es Salaam, told journalists that these emerging economies “have become an important force for world peace” – while arguing that the “global economic governance system must reflect the profound changes in the global economic landscape, and the representation and voice of emerging markets and developing countries should be increased.”

Ending poverty is ambitious but doable mostly because of efforts in India and China. The World Bank global poverty rate fell from 42 per cent in 1990 to 25 per cent in 2005, and may yet fall by 205 to 15 per cent, or 900 million people.

To make this goal possible, this summit will debate a proposal to create a BRICS development bank. The idea came from economists Joseph Stiglitz, Nicholas Stern and Mattia Romani in the belief that the BRICS should “consolidate” funds to build infrastructure and “boost confidence for developed-country investors to participate in the expanding markets of the world and the growth story of the future.”

It would supplement but perhaps undermine, as former prime minister Paul Martin suggests,  the International Monetary Fund, the World Bank and the African Development Bank – institutions that BRICS members find sluggish and inflexible.

But what would it do that the others cannot? And would they not be better to seek reform of these existing institutions? The idea is likely to remain a topic for discussion at future meetings.

The BRICS countries together represent about 43 per cent of the world’s population and approximately one-fifth of global gross domestic product (GDP). In 2012, the BRICS accounted for approximately 11 per cent of global foreign direct investment flows ($465-billion) and about 17 per cent of world trade.

By 2020, the UNDP says in its 2013 report, the combined economic output of Brazil, China and India will surpass the aggregate production of Canada, France, Germany, Italy, the United Kingdom and the United States.

Other countries, including Nigeria, Indonesia and Turkey are looking toward eventual membership in the BRICS group. Egyptian President Mohamed Morsi, who will be at the meeting, has suggested the grouping be expanded to “E-BRICS.”

Goldman Sachs economist Jim O’Neill coined the BRIC acronym in 2001 as a clever shorthand to describe the largest emerging markets. He is unconvinced that South Africa, which joined the association in 2010, merits membership.

Within the BRICS there are tensions, old and new. There remain border tensions between China and Russia, and between China and India. South Africa, Brazil and India are democracies. China is not, and Russia is only in name. China and India, as consumers, want lower commodity prices, while Russia, Brazil and South Africa, as producers, want higher prices.

Then there are the disparities: China’s economy is 25 per cent larger than those of the other four BRICS nations combined, and 22 times larger than South Africa’s.

Some Africans decry China’s “neo-colonialism.” Nigeria’s central-bank governor Lamido Sanusi recently argued that Chinese activity in Africa is a new form of imperialism, sucking oil and resources out of the continent then selling back its manufactures.”

The BRICS also want more influence on issues of peace and security. Syria’s President Bashar al-Assad has asked for intervention by the BRICS “to stop the violence in his country and encourage the opening of a dialogue.”

Yet neither China nor especially Russia have behaved constructively at the United Nations Security Council. With authority comes responsibility. The BRICS aren’t there yet.

But the BRICS summit raises an important question for the West.

If the World Bank and the IMF aren’t working for the emerging nations, shouldn’t we try to fix them? Isn’t it time to redress the stranglehold whereby the World Bank is always headed by an American and the IMF by a European?

President Xi is on solid ground when he argues that the global economic governance system should reflect the profound changes in the global economic landscape. The G-20 was supposed to accomplish this but its performance to date has been a disappointment. There is still a ways to go.

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Colin Robertson, March 27th 2013 | Tags: , , , , , , , , ,
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On the Re-Integration of CIDA into DFAIT

In the wake of the Federal Budget (March 21) the Globe and Mail published a series of pieces on the Government’s decision to fold CIDA into DFAIT. Below is the piece I wrote with links to the others in the series. I was surprised that most favoured the move. I spent Friday at an excellent Canadian International Council conference on China that included former Foreign Ministers and former senior officials – they, too, thought the move made sense. If they can take the shrewd and pragmatic ‘head’ of the old External Affairs, the entrepenurial ‘can-do’ spirit of the old Trade Commissioner Service and CIDA”s generous ‘heart’, it will work for Canada.

There is a lot of work ahead for the ‘new’ Department of Foreign Affairs, Trade and Development but policy coherence is the first step if the Government is to accomplish its ambitious international agenda. Mergers are difficult things. The divorce and then re-union of Foreign Affairs and International Trade (PM Martin to PM Harper) absorbed a tremendous amount of energy by the departments’ best brains – hardly a productive use of their talents. Even with CIDA in DFAIT, their combined budget is still only about half that of Aboriginal Affairs and Northern Development. One of the first challenges will be filtering and weaning the CIDA client list. Care must be taken not to throw out the baby with the bathwater, especially in areas where we have demonstrated capacity-building experience like youth, women and education.

In addition to the commentary in the Globe, I also recommend Jeremy Kinsman,  Doug Saunders, Scott Gilmore Bernard Wood. Joe Ingram and Aniket Bhushan of the North South Institute and Eric Morse and Eugene Lang. The Media Co-OP also has a perspective.

For further intellectual nourishment, read former World Bank president Robert Zoellick’s excellent speeches (2011) A New Social Contract for Development and Beyond Aid. There are also a pair of very good studies: Reinventing CIDA (2010) and Reinventing CIDA: One Year Later (2011) done for CDFAI by Gordon Smith and Barry Carin.

The CIDA move’s not radical. Canada is just playing catch up

COLIN ROBERTSON The Globe and Mail Friday, Mar. 22 2013

The re-integration of CIDA into Foreign Affairs and International Trade is a sensible move.

Sensible because, notwithstanding best efforts at the senior political level, whether the government of the day was Conservative or Liberal, there has too often been a disconnect in the field in the conduct of our foreign policy objectives and delivery of development assistance.

Also sensible because it will likely require a change in the current culture of CIDA and the capacity of Foreign Affairs to rise to the challenge. Neither is certain. It remains to be seen if they can also overcome tensions between domestic priorities and international commitments in the development sphere.

CIDA emerged during the initial expansionary phase of government in the early Trudeau years from the External Affairs Aid Office. It was intended to operate in the field as a development delivery agency, a bit like immigration selection. Instead, under the direction of Paul Gérin-Lajoie, the former Quebec education minister who served as CIDA president during this period, it developed an arguably independendist personality and a distinct culture.

Operating from its base across the Ottawa River in Quebec, there was no way CIDA would take direction from the striped pants brigade in the Pearson building. Long-term development, argued the prelates at CIDA, should not be subject to short-term diplomatic imperatives.

CIDA officers at missions overseas took their cue accordingly and, armed with separate and substantial budgets that eclipsed those of Foreign Affairs, they could and would often operate independently of the Ambassador or High Commissioner, even though the latter was intended to have overall responsibility. Immigration officers operate on a similar basis but their strict regulatory code is transparent and designed to protect the ambassador from facing invidious local pressures.

At home, CIDA has become the sustainer and often principal source of a plethora of non-government groups, all of which claimed to have development objectives, some of which were not in alignment with government policy.

Letting a thousand flowers bloom can have advantages, but over time these relationships came to resemble that of patron and client. There were a couple of problems with this approach.

First, CIDA became a policy center with a network of clients who, in turn, developed a sense of entitlement.

Second, the direction was not always congruent with our foreign policy. In the development world there is a tendency towards moralism and a disdain for the urgencies of realpolitik.

There were awkward conversations with foreign governments when the NGOs and, occasionally, the CIDA operative in the field, failed to appreciate the distinction between development and interference in the host country’s domestic affairs. This did not advance Canadian interests.

In recent speeches , CIDA Minister Julian Fantino has promised a new direction that would link CIDA programs directly to our trade and foreign policy objectives because “we have a duty and a responsibility to ensure that Canadian interests are promoted.”

CIDA partnerships would be broadened to include business as well as NGOS and multinational organizations. Mr. Fantino had no time for the moralists saying that “this is Canadian money” and that he found it “very strange that people would not expect Canadian investments to also promote Canadian values, Canadian business, the Canadian economy.” Nor would, he said , “NGOs be funded for life” scotching the belief that “CIDA only exists to keep NGOs afloat.”

This philosophical shift is not unique to Canada.

It is supported by an emerging school of thought that argues that after half a century and $2.4-trillion in investment the old approach to aid has not worked. In White Man’s Burden, William Easterly writes that multilateral and national aid agencies are staffed by well-meaning planners who see “poverty as a technical engineering problem that [their] answers will solve” when in reality “poverty is a complicated tangle of political, social, historical, institutional and technological factors.”

Even more radical is Dambisa Moyo, who argued in Dead Aid that aid is the fundamental cause of poverty and therefore eliminating aid is critical to spur growth in ailing African states.

We are not the first government to bring aid back under the direction of foreign affairs or to try to instill a ‘business’ perspective. The British, Australians and New Zealanders as well as other European countries are aiming at the same objective. As Britain’s Aid Minister Justine Green put it this past week, her objective, “for developing countries is an end to aid dependency through jobs.”

To end the turf battles over authority and accountability, former U.S. president George W. Bush brought US AID under the direction of the State Department and established the Millenium Challenge Corporation to address corruption. It added strict accountability measures and good governance conditionality to its grants with the hope that it would become the model for U.S. 21st-century development assistance.

The Obama Administration kept this structure and as Secretary of State Hillary Clinton promised to make US AID the premier development agency in the world. She described development an “indispensable foreign policy tool for advancing American interests and solving global problems.” But judging outcomes is difficult and he jury is still out on whether the approach is working.

The integration of CIDA into Foreign Affairs and the congruence of development and diplomatic policy makes sense and it should help Foreign Minister John Baird put flesh onto his ‘dignity agenda. But it will take much effort.

Hard questions will need to be asked on how and where our foreign aid is spent. The emphasis will need to be on outcomes that visibly advance development as well as Canadian interests. No easy task.

More Related to this Story

excerpted from Maclean’s Luiza Savage interview with CIDA Minister Julian Fantino ‘On Canada’s changing aid to Haiti, the merger of CIDA and DFAIT, and the role of the private sector in development’ Friday, May 10, 2013

Q: A former Canadian diplomat, Colin Robertson, wrote that the merger was a good thing because CIDA had become “a policy centre with a network of clients who, in turn, developed a sense of entitlement.” He added that “the direction was not always congruent with our foreign policy. In the development world, there is a tendency towards moralism and a disdain for the urgencies of realpolitik.” Is there any truth to that? Was there a problem?

A: There was no problem. I think that there is a very fundamental need for us to coordinate our efforts with respect to what Canada does. We heard it here time and time again from the international community. You’ve got DFAIT working on projects in the same country and same location as what CIDA does, so there is a need to coordinate our efforts.

Q: So what will this mean on the ground?

A: We will create a united front on how we spend Canadian tax dollars in areas of development. It will mean more efficiencies and effectiveness. It will also mean that development will now be entrenched in Canadian law.

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    Colin Robertson, March 22nd 2013 | Tags: , , , , ,
    Posted in op-ed

    Canada, Energy and the Environment

    We need a national ecological strategy to match our energy ambitions

    The Globe and Mail Wednesday, Mar. 13 2013

    “There are an awful lot of folks who are trying to make up their minds, and trying to draw the right balance,” observed U.S. ambassador David Jacobson on the divide between the energy and security benefits of oil-sands imports and the environment. On the environment, he was emphatic: “There needs to be more progress.”

    Sadly, wrongly, the Keystone XL pipeline debate has become the U.S. environmental movement’s litmus test for the Obama administration’s position on climate change. In reality, the American emissions challenge is not so much Canadian production as American consumption.

    The columnist Fareed Zakaria wrote this week that Keystone XL is “a symbol of how emotion has taken the place of analysis and ideology now trumps science on both sides of the environmental debate.”

    But Canada is capable of demonstrating the “progress” requested by ambassador Jacobson – and if we do so, the benefits to Canada can be even greater.

    Start with the measurable climate-change achievements that can be met through provincial initiatives.

    British Columbia has a working carbon tax. Alberta has a carbon compliance market. Saskatchewan has piloted carbon capture and storage, including collaborative projects with Montana and North Dakota and the US Department of Energy.

    Leadership in getting out of coal-fired generation began in Ontario. Quebec has a cap on carbon. There are other projects – tidal power in the Bay of Fundy, alternative energy initiatives in biomass, wind and solar.

    In terms of land claims and constructive collaboration with First Nations, Manitoba and Quebec lead the way in their development of hydroelectricity, including transmission lines.

    Knit these initiatives together and look to the lessons learned in the negotiation of the Boreal Forest Accord. Its architect Avrim Lazar says the forest industry concluded that “our jobs and growth in the future will rest on making our environmental practices the highest in the world.”

    Make our experience the base for further regional ‘green’ initiatives, especially those that focus on water use. These will also give us critical components of a national energy strategy that will put us ahead of our climate-change obligations. Many companies in the energy sector are already using shadow carbon pricing.

    Draw on efforts taking place at the provincial level and by the premiers, who are working both Washington and their governor counterparts.

    In so doing, we can also go a long way towards developing a national energy strategy, one that should also include getting our oil and gas to tidewater. The discussions launched by premiers Redford, Alward and Marois deserve further debate at the Council of the Federation when they meet this summer.

    Trans-border environmental cooperation is well-entrenched. In 2009 Canada and the United States celebrated a century of co-operation protecting shared waters. Regional collaboration is especially strong at the premier and governor level.

    Premiers Wall, Redford and Selinger were all working Washington recently, the latter pair at the recent National Governors Association. Premier Wall made a useful observation that Americans need to be constantly reminded of their northern partner because “like a long-lasting marriage, it’s important to have a date night.”

    Premier Selinger argued that we also need to push the Americans to show some “progress” of their own on hydroelectricity, the cleanest energy in terms of greenhouse-gas emissions. Ambassador Doer is right when he decries US obfuscation in defining Canadian hydro under renewable-energy standards.

    We are in alignment with the US on our Copenhagen commitments. Our vehicle emission standards are in tandem.

    We are ahead, although not pure, on national coal standards that will see the eventual phase-out of coal generation. Ontario will close its coal-burning plants by the end of this year. A decade ago, coal fired 25 per cent of its grid.

    Our weak link is oil and gas regulations, now promised for mid-year.

    Usually, we are the ones making ‘asks’ of the United States on environmental issues such as Acid Rain, the Devil’s Lake water diversion, Great Lakes clean-up, and preserving the sanctity of the Arctic. Brian Mulroney artfully demonstrated that on Acid Rain, when we clean up our own act, we can ‘shame’ the United States into action.

    The perception that we are on the wrong side of the environmental fence doesn’t jibe with where Canadians tell pollsters they want their government to be.

    At his namesake convention this past weekend, Preston Manning encouraged Canadian Conservatives to make the environment a ‘sword’ rather than ‘shield’ and become “more positive and proactive.”

    We can meet or exceed Ambassador Jacobson’s expectations with a national ecological strategy that matches our energy strategy. To paraphrase Prime Minister Harper, we have within our capacity the ability not just to be an energy superpower, but to be an ‘eco-energy’ superpower

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    Colin Robertson, March 13th 2013 | Tags: , ,
    Posted in op-ed

    On Nato and Canada: Commitments and Cybersecurity

    NATO’s toughest battle is the discussion about its future

    COLIN ROBERTSON Special to The Globe and Mail Published Wednesday, Feb. 20 2013

    When NATO’s Defense ministers meet in Brussels this week, they will talk about the endgames in Afghanistan and Mali, and defence spending. Canada should use the occasion to press for an honest discussion on NATO resourcing and encourage the Alliance to focus on the emerging challenge of cyber-security.

    Most of the allies, including Canada, have served notice that they will be gone sooner than later from both Afghanistan and Mali, leaving only a residual force in both places. For now, there is no enthusiasm within the Alliance for out–of-area operations and with reduced spending there is even less capacity to act.

    In 2006, the Allies committed to defence spending of a minimum of two per cent GDP. In 2012, only four of the twenty-eight member nations met the target.

    In addition to the division it creates between member countries, the effect of these disparities is threefold writes Secretary General Rasmussen: first, an ever greater military reliance on the United States. Second, growing asymmetries in capability among European Allies. Third, a defence gap that will compromise the Alliance’s ability in international crisis.

    The US has carried the load in the Alliance.

    Sequester and cuts will reduce American capacity. It expects more from the partner nations, with former Defense Secretary Robert Gates, warning that future US leadership, “for whom the Cold War was not the formative experience that it was for me – may not consider the return on America’s investment in NATO worth the cost.”This deserves a frank discussion.

    As a start, NATO should probably revise its commitment figure to reflect fiscal realities – probably closer to the 1.5 per cent that Canada, and most other members, currently spend on defence.  Then look hard at how the money is spent.

    A fifth of Alliance defence spending is supposed to go towards new equipment, crucial for NATO modernization efforts. This makes sense yet, only five allies meet the target.

    NATO needs to look at procurement and discuss best practices so we can spend our money with effect. Nobody, except perhaps the French, do it well.

    Part of the problem, as we witness in Canada over the F-35 debacle, is the inability to accurately predict costs or meet a schedule. In a useful report, Canada First: Leveraging Defence Procurement through Key Industrial Capabilities, business leaderTom Jenkins presented a series of recommendations that focus on five clusters: Arctic and Maritime Security, Protecting the Soldier, Command and Support, Cybersecurity, Training Systems and In-Service Support.

    Jenkins’ recommendations are sensible and they should feed into discussion of an industrial defence strategy that also includes concepts like buying off-the-shelf and performance incentives (and penalties).

    In a look at the wider world, another useful report, Strategic Outlook for Canada: 2013, authored by Ferry De Kerckhove and George Petrolekas, enumerates a baker’s dozen threats including nuclear proliferation from North Korea and Iran, turmoil in Syria and the Middle East, a cloning Al-Qaeda, China’s disputes with its neighbours, especially Japan. There are also threats closer to home: the continental drug trade, Haiti “the perennial rock of Sisyphus” and “a new, very cold war, in cyberspace.”

    The cyber-threat deserves immediate attention.

    Homeland Security Secretary Janet Napolitano observed last week that not a day goes by without intrusions on the US defense and financial establishment. This likely holds true for us as well. Most of it originates from three countries: China, Russia and Iran.

    In one of the first actions of his second term, President Obama signed an Executive Order directing US government agencies to prepare cybersecurity standards for the nation’s rail, road, air and energy grids.

    The Order should stimulate Canadian cyber-preparedness. Our continental grid system is so integrated and vital to our economic well-being that we should act in tandem with the US.

    NATO also has an economic mandate – inspired by Canada – so let’s make cyber-standards an Alliance initiative.

    Canada was present and actively participated in the creation of NATO. Times and circumstances have changed, but the rationale for collective security in an alliance of like-minded democracies remains the same.

    Strategic Outlook predicts that Canadian policymakers will increasingly favour pragmatism over principle; containment over involvement; reflection over engagement. These attitudes are likely shared across the Alliance. Leaders should bear them in mind as they envisage the future NATO.

    …

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    Colin Robertson, February 20th 2013 | Tags: , , , , ,
    Posted in op-ed

    Wise Words from ‘Wise Men’ on US Defense and Security

    From Winter edition 2012  ON TRACK Vol. 17 No. 3.

    Wise Advice on the Fiscal Cliff and US Security

    The reelection of President Obama to a second term and his determination to deal with U.S. economic challenges – currently characterized by the ongoing discussions around the ‘fiscal cliff’- mean that the US Forces face a degree of austerity.

    After a decade of expansion and active combat in foreign wars, re-examination of American national security policy and capacity is sensible. Common sense should prevail. Regardless, more will be expected from the rest of the Alliance.

    Sequestration and already scheduled cuts would impose a haircut of almost 10 per cent on the Pentagon over the next decade. While Defence Secretary Leon Panetta has warned of a ‘meat-ax’ approach that would jeopardize national security, the devil will be in the detail.

    Some perspective is also necessary: during the past decade, the base defense budget has nearly doubled, from $297 billion in 2001 to more than $520 billion and it was projected to rise to $700 billion by 2020. While the scope of the cuts is still unclear

    Pentagon spending has lots of congressional protectors, especially with the bases and jobs that depend on research and hardware – aircraft and ships – that are built in nearly every corner of the country. There is acknowledgement even among defense advocates that they will need to do their part.

    A group of wise persons – the Coalition for Fiscal and National Security, chaired by former Joint Chiefs Chair Admiral (ret.) Mike Mullen, have intervened with sensible advice that should be read by all the Allies.

    Spanning eight administration the Coalition includes former defense secretaries Robert Gates, Harold Brown and Frank Carlucci; Paul Volcker, the former chairman of the Federal Reserve;  former secretaries of state Madeleine Albright, James Baker, Henry Kissinger and George Shultz, former Treasury Secretary Paul O’Neill former senators Sam Nunn and Jack Warner, former House Armed Services chair Ike Skelton and former National Security Advisors Sam Berger and Zbigniew Brzezinski.

    They argue that the national debt is “the single greatest threat to our national security” and that the crisis “ has revealed a perhaps equally dangerous political one: Our inability to grapple with pressing fiscal challenges represents nothing less than a crisis in our democratic order. “

    The U.S. accounts for 48 percent of the world’s military spending. While the overall budget may not shrink it will certainly not grow at the same rate as it has since 9/11. This will mean hard choices within the Department of Defense as they face new challenges around cyber-security and continue the pivot towards Asia, while trying to maintain current Force readiness.

    Intelligent pruning is possible, however, and the Coalition observe: advances in technological capabilities and the changing nature of threats make it possible, if properly done, to spend less on a more intelligent, efficient and contemporary defense strategy that maintains our military superiority and national security.”

    They argue that “advances in technological capabilities and the changing nature of threats make it possible, if properly done, to spend less on a more intelligent, efficient and contemporary defense strategy that maintains our military superiority and national security.” In the belief that an ounce of diplomacy is worth a pound of ‘shock and awe’, the Coalition recommends spending more on the State Department to enhance the “non-defense dimensions of our national security” and “diplomatic assets.”

    In her confirmation testimony Secretary of State, Hillary Clinton elaborated on this approach. She defined ‘smart power’ as using all the tools at Americas disposal -  diplomatic, economic, military, political, legal and cultural – “picking the right tool or combination of tools for each situation”   arguing that “with smart power, diplomacy will be the vanguard of our foreign policy.”

    The Americans will eventually find a way to avoid their ‘fiscal cliff’ because, as Churchill observed, you can always count on them to do the right thing, “after they have exhausted all the other possibilities.” The Coalition concluded that the new compact requires not   “Herculean efforts, but a fusing of common sense, fairness, and pragmatism. It summons the truest form of patriotism – putting our country first.”

    It will, however, require the Alliance to step up to the plate.

    Both Gates and current Secretary Leon Panetta have called on the Allies to step up to the plate. Afghanistan and Libya illustrated the limits of the Alliance: despite relative unanimity around the mission when it came to operations in the field their commitment was variegated.  Some countries placed limits on their positions or caveats on the use of their forces. In Libya, eight allies bore the burden of the strike mission.

    In the decade following 9/11, European defense spending declined by nearly 15 percent. Only five of the 28 allies now spent the agreed target of 2 percent of GDP on defense (for 2011 Canada stood at 1.4 percent).

    In his farewell speech to the NATO Council (June 2011),  Gates warned of a ‘two-tiered’ alliance between those “willing and able to pay the price and bear the burdens of alliance commitments, and those who enjoy the benefits of NATO membership … but don’t want to share the risks and the costs.” Gates observed that “despite more than 2 million troops in uniform — not counting the U.S. military — NATO has struggled, at times desperately, to sustain a deployment of 25,000 to 40,000 troops, not just in boots on the ground, but in crucial support assets.” More recently, at the NATO Parliamentary Assembly in Prague (November, 2012) Secretary General Anders Rasmussen echoed the appeal and called on the legislators to ‘hold the line’ on defence spending.

    Canada will be expected to do its part. We do so, not because the US is asking us to, but because of our longstanding commitment to collective security, More importantly, the national interest requires us to invest in our own security and not rely on others to do it for us.

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    Colin Robertson, February 12th 2013 | Tags: , , ,
    Posted in op-ed
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