North American Economic Integration

      Comments Off on North American Economic Integration

From IPOLITICS

Will North America achieve closer
economic integration? iPolitics Insight

By | Oct 11, 2012

The idea of North America is ready for a revival. This week’s meeting in Ottawa of the North American Forum provides an opportunity to talk through the cause of closer continental economic integration and interdependence.

Meeting annually since 2005, the Forum brings together senior representatives from government, business and the research community. It will not decide change but their discussions, whether in plenary or in the corridor, help inform good policy.

There will be close attention to the Canadian energy debate over finding new markets and investment. How do we manage relations with China in the context of the CNOOC bid for Nexen against the backdrop of Huawei and cyber espionage?

Will the new Mexican administration open its energy sector to foreign investment? And how will it deal with the drug wars that have taken over 50,000 lives, chilling both tourism and investment?

There will be keen interest in the U.S. election and the bigger question of how the U.S. will deal with its fiscal cliff. The IMF warns that ‘muddling through’ is inadequate and that risks of a global slowdown are ‘alarmingly high’ because of policy uncertainty in Europe and the United States.

Americans should take home the MacDonald-Laurier Institute’s latest study, Northern Light: Lessons for America from Canada’s Fiscal Fix. Canada stood at a similar abyss in the early ‘90s but with cross-party political consensus, determined leadership at every level of government and a combination of retrenchment and revenue generation, we put our house in order.

But the main focus of discussion will be: How can we marry our resources, markets and labour with our geography so as to create sustainable jobs and prosperity?

The first iteration of the North American idea – the NAFTA – ushered in a decade of growth and prosperity for all three partners, although there continues to be little appreciation of this in the United States. NAFTA became the scapegoat for job loss and outsourcing. An unfair charge, but neither business nor successive governments made much effort to correct the record with the result that any effort at trade liberalization in the U.S. faces an uphill struggle.

The NAFTA-generated gains of continental economic integration were realized during its first decade. A combination of new border restrictions in the wake of 9-11, then recession and continuing economic turmoil have stalled progress.
Success requires American leadership.

George W. Bush’s effort to first revive the North American idea through the Security and Prosperity Partnership was well-intentioned but lacked focus and ran out of steam. With an overflowing international in-box – the financial crisis, the wars and unrest in the Middle East and Arab states – North American integration has not figured large on President Obama’s agenda. The summits have been perfunctory, sporadic and more an occasion for three separate bilateral discussions than advancing the trilateral agenda.

But with Canada and Mexico about to become active members in the December round of the Trans Pacific Partnership (TPP) negotiations, there is additional incentive for North America to get its act together.

In terms of economic integration, North America has a long way to go. The World Bank estimates that European integration has reached nearly 75 percent, and Asia is over 50 percent. NAFTA only stands at about 50 percent. Without the auto industry, our joint production would be much lower.

Yet autos should point the way forward. Smart supply chain production means that cars and trucks made in North America contain a high degree of parts manufactured in at least two, if not all three, partners.

Start with unfinished business: the U.S. has launched regulatory reform with both Mexico and Canada and the two-tracks should be pursued in tandem and harmony.

So should the efforts to expedite the flow of goods across our borders. We welcome the new American economic patriotism, but let’s be sure it doesn’t morph into old fashioned Yankee protectionism.

Americans need to remind themselves that U.S. imports from Mexico and Canada contain an average of 40 percent American-made parts, compared to about 4 percent for imports from China.

U.S. trade with Mexico translates into six million American jobs, while U.S. trade with Canada generates over eight million jobs.

The North American idea makes sense. Trilateralism requires accommodating our differences in language, culture and economic development. The emphasis is less on considerations of power, than on crafting rules that can have a wider application, especially now that we are together in the TPP.

The political auspices in all three countries are propitious. Mexico’s Enrique Pena Nieto takes office in December with a six-year mandate and a commitment to increase trade. In January, the next U.S. Administration will take office for four years. Mr. Harper is secure with his majority government until May 2015. There is elbow room for action.

On the first presidential debate

      Comments Off on On the first presidential debate

CPAC’s Peter Van Dusen welcomes Barry McLoughlin (McLoughlin Media), former diplomat Colin Robertson (Canadian Defence & Foreign Affairs Institute), and journalist Luiza Ch. Savage (Maclean’s) for a Canadian perspective on the American presidential campaign and tonight’s debate.

A Primer on Canada and the UN

      Comments Off on A Primer on Canada and the UN

From Ipolitics October 1 2012  A Short Primer on Canada and the UN

Canadian Foreign Minister John Baird is scheduled to deliver Canada’s address to the United Nations General Assembly (UNGA) this week.  He will be joining presidents, prime ministers and foreign ministers from around the world who began descending on New York last week to speak to the 67th session.

What is on this year’s agenda?

The agenda covers the waterfront of issues but four that will gather headlines are:

Iran and the International Atomic Energy Agency report on Iran’s nuclear program: Israeli Prime Minister Benjamin Netanyahu told the General Assembly last week that it is “getting late” to stop Iran and called on nations to place “a clear red line on Iran’s nuclear weapons program.” In his UNGA remarks last week President Obama said, “A nuclear-armed Iran is not a challenge that can be contained. It would threaten the elimination of Israel, the security of Gulf nations, and the stability of the global economy. And that is why the United States will do what we must to prevent Iran from obtaining a nuclear weapon.” The President, observed former US Ambassador Nicholas Burns, has come down, “on the side of diplomacy and negotiations backed up by sanctions and the threat of force.”

Syria and the estimated 25,000 people killed in recent months: The Security Council is divided with the Russians and the Chinese not supporting any overt move to aid the rebels or to intervene militarily by the United States. In his remarks last week, President Obama reiterated the call for Bashar al-Assad to leave power but as Richard Haas, president of the Council of Foreign Relations noted, “there’s a gap between American goals, which is to see the regime and leadership go, and American means, which are quite, quite, quite limited.”

Millennium Agenda: What next for the UN antipoverty agenda? For the past twelve years the millennium development goals (MDGs) have channeled hundreds of millions of dollars of aid money with effect – millions in China and India are now over the threshold, and in improving access to clean water, primary education and maternal and child health care. But the goals now need to be renewed and there is pressure to have the next iteration include sustainable development. Secretary General Ban Ki-Moon has appointed a 26-member panel of eminent persons to advise him on the global agenda after 2015 and they are expected to submit a report in the first half of 2013.

Palestine: Last year there was an intense debate around the Palestinian bid for UN membership, an initiative thwarted by the US with Canadian support. However, in his UNGA speech last week, Palestinian President Mahmoud Abbas said consultations are under way to upgrade, by the end of this year, the Palestinian U.N. status from observer to that of ‘nonmember state’. This is less than what was sought last year but it could still create potential problems – the US Congress has legislated against support for UN agencies with Palestinian membership.

What about Canada and the United Nations?

Canada is the seventh largest contributor to the UN. Canadians were present and active participants at the San Francisco Conference in June1945 that created the UN. We earned our reputation as a helpful fixer and bridge-builder based on our multilateral work. Peacekeeping was a useful Canadian innovation, in response to the Suez crisis of 1956. Canadians justly take pride peacekeeping but our larger contribution to the UN  far exceeds this particular initiative. Preacekeeping reflected a special time and place, yet it tends to overshadow our work in other vital areas.

The principle underlying Canada’s contribution is functionalism. As practiced by Louis St. Laurent and L.B. Pearson, it means finding our niche, based on national interests and expertise, and then doing our best. In recent years we were architects of the Responsibility To Protect doctrine and we were leaders in the campaign against land mines, child soldiers and in the creation of the International Criminal Court.

In 2010 we sought a seat on the Security Council, in competition with Germany and Portugal, as part of the Western Europe and Other Group (WEOG). We withdrew after placing third on the first ballot. It occasioned a great deal of angst amongst critics who faulted the Harper Government for waging an inept campaign and who decried what they described as a strident, unbalanced approach to foreign policy.

As Denis Stairs argues in Being Rejected in the United Nations, our loss probably has as much to do with the evolution and solidarity of the European Union. We would be better to recognize geography and transfer ourselves from the WEOG to the Americas. This year Australia, also part of the WEOG, is seeking a seat along with Finland and Luxembourg. The backing of 129 countries – or a two-thirds majority – is needed to win a two-year stint on the council. The result in the secret ballot is notoriously difficult to predict.

Prime Minister Harper last delivered the Canadian address to UNGA in 2010 in support of our UN Security Council bid. In his remarks the Prime Minister underlined the need for “enlightened sovereignty, the idea that what’s good for others may well be the best way to pursue one’s own interests.  In business, it is called win-win.  And it is good for business.  In international affairs, it is good for development and for justice.  And it is in the spirit of the UN Charter.”

As an indication of themes that will be addressed in this year’s address by Foreign Minister Baird, look back at his address last year to the UNGA. He elaborated on the theme of ‘enlightened sovereignty’ saying, “Multilateral institutions and multilateral action result from a collection of sovereign decisions based on individual states’ own interests: Not narrow self-interest in sovereignty’s name, but an expanded view of mutual interest in which there is room for all to grow and to prosper.”

Baird also noted that, “Canada does not just “go along” in order to “get along.” We will “go along” only if we “go” in a direction that advances Canada’s values: freedom, democracy, human rights and the rule of law…The Second World War taught us all the tragic price of “going along” just to “get along.” It was accommodation and appeasement that allowed fascism to gather strength. As Winston Churchill said: “An appeaser is one who feeds a crocodile, hoping it will eat him last.” We respect state sovereignty, but Canada will not “go along” or look the other way when a minority is denied its human rights or fundamental freedoms.”

On the issue of Palestine Mr. Baird said, “Our government’s position has been clear—the only solution to this issue is one that is negotiated by the two parties themselves.“ On Israel, he was equally clear: “We uphold Israel’s right to exist. We uphold its fundamental right, like any member state, to defend innocent civilians against acts of terrorism,“ declaring that “Canada will not accept or stay silent while the Jewish state is attacked for defending its territory and its citizens.”

Baird also announced that the Government would establish an Office of Religious Freedom to “promote freedom of religion and freedom of conscience as key objectives of Canadian foreign policy.” He also called for UN reform based on the principles of:

  • accountability, transparency and ethics;
  • financial responsibility and fiscal austerity;
  • efficiency and the elimination of waste and duplication;
  • regular reviews to sunset unnecessary, redundant and obsolete mandates; and
  • zero tolerance for conflicts of interest, fraud and corruption.

Look also for Mr. Baird to elaborate on the theme of his recent (September 14) speech to the Montreal Council on Foreign Relations describing what he called the  “Government’s principled, values-based foreign policy, steeped in the conviction that, as a free nation, we must promote and protect the fundamental liberties of people around the world”. A key premise of this policy, said Baird, is respect for the rights of women and “the role of the state to protect its people regardless of gender, sexuality or faith.”

Baird will also likely draw inspiration from Prime Minister Harper’s remarks to the Appeal of Conscience Foundation last week in New York where he was honored as World Statesman of the Year. Mr. Harper declared that governments must aim, “to be good world citizens, to try to understand other points of view and to act in concert with our partners, for the wider interests of humanity. That is, of course, not the same thing, friends, as trying to court every dictator with a vote at the United Nations or just going along with every emerging international consensus, no matter how self-evidently wrong-headed. When confronted with evil in the world, we do take a stand, we take strong, principled positions in our dealings, whether popular or not. And that is what the world has counted on from Canada – and received – in two world wars, in Korea, in a generation of peacekeeping operations, Gulf War One, and of course, most recently in Afghanistan and also in Libya.”

Background on the United Nations

With a current membership of 193 states, the UN is the big enchilada of international organizations. As defined by its Charter, the purpose of the UN is threefold:

  1. to maintain international peace and security;
  2. to develop friendly relations among nations; and
  3. to cooperate internationally in solving economic, social, cultural or humanitarian character, and in promoting respect for human rights.

The actions of the United Nations are based on certain principles:

  • all of its members are equal;
  • all members must fulfill their Charter obligations ie to practice tolerance and live together in peace with one another as good neighbours, and to unite our strength to maintain international peace and security;
  • international disputes are to be settled by peaceful means;
  • members may not use force or the threat of force against other members;
  • members must help the United Nations in any action it might take in accordance with the Charter;
  • the United Nations may not interfere in the domestic affairs of any state.

It scope and scale the UN constitutes its own planetary system. Its main office is in New York City’s Turtle Bay facing the East River. Within it the General Assembly of all 193-member states meets from mid-September to mid-December. It’s the talking shop and from the General Assembly emerges resolutions ranging from the sensible – campaigns to combat AIDs, to the stupid – Zionism as racism. The resolutions have no practical application, although they can carry moral weight.

The fifteen-member Security Council is the ‘decider’. It is in permanent session to deal with issues of peace and security. The five permanent members: the US, China, Russia, Britain, and France are joined by another ten elected on regional lines, who serve two-year terms. Various efforts have been made to reform this 1945 hierarchy of powers, but without success.

Attention tends to focus mostly on the Security Council and General Assembly but the strength and substantive work of the UN takes place in its galaxy of over 200 specialized agencies. In addition to the International Court of Justice, Economic and Social Council, and Trusteeship Council, these include the Food and Agriculture Organization (Canadians played a key role in its creation), the World Health Organization, the United Nations Environment Program, the International Atomic Energy Association.

All of this is supported by a Secretariat headed by a Secretary General who is elected by the General Assembly on the recommendation of the Security Council. The UN budget is set by the General Assembly with ‘contributions’ of member states based on a formula that does not reflect current realities. The US provides about ¼ of funding with another ¼ coming from Japan, Germany, France and Britain. ‘Developing’ countries, including China, pay considerably less. Like the make-up of the Security Council, who pays what is in urgent need of reform.

Further Reading:

For current news on the UN go to the UN New Centre. For information on Canada, start with the very good DFAIT website on our UN presence. It has a wealth of useful information, including a collection of speeches outlining Canada’s position on the many issues addressed within the UN family. Scholar and CDFAI Senior Distinguished Fellow Denis Stairs looks at Canada’s UN Security Council defeat in Being Rejected in the United Nations.

Several Canadian ambassadors have written about their UN or UN-related experiences. A Season in Hell Is a harrowing tale of kidnap in West Africa while on a UN mission by former UN Ambassador and CDFAI Advisory Council member Robert Fowler. MP and Parliamentary Secretary Chris Alexander writes of his Afghan experience while serving as Canadian ambassador and later UN envoy in The Long Way Back. Scholar and former diplomat Paul Heinbecker draws on his experience as Canadian Ambassador to the UN in Getting Back in the Game.  Former Secretary General Kofi Annan has just published a memoir Interventions: A Life in War and Peace that describes his half century of service to the United Nations and critically discusses recent conflicts, including his unsuccessful mission to Syria.

North America’s Transportation Corridors

      Comments Off on North America’s Transportation Corridors

An edited version of these remarks to the North America;s Corridor Coalition Inc, appeared in the Winnipeg Free Press, September 25, 2012.

As the historical gateway to the West, from the fort at the Forks to today’s CentrePort and the new international Airport, Winnipeggers instinctively appreciate the importance of trade and the role of transportation.

Trade is increasingly based on efficient production. That demands the just-in-time arrival of a part, a piece of equipment, or a person who can quickly fix things. Investment decisions are calculated through production chain dynamics and the proximity to resources and markets.

Improving transportation for the flow of people and movement of goods is the focus of this week’s meeting in Winnipeg of the North American Corridor Coalition (NASCO), the tri-national association of heartland states and provinces, cities and business that support over a trillion dollars in continental commerce.

The infrastructure that serves our production chains – our roads and rail lines, our sea and airports, our power grids and pipelines that fuel our factories and offices – must link seamlessly. Get it right and we all prosper. This is the logic of CentrePort.

The big idea that binds NASCO is North America as a production platform that draws on pooled capital, resources and labour to serve a market of 450 million consumers.

It’s not new – it was a key argument behind first the Canada-US Free Trade Agreement and then the North American Free Trade Agreement. Those agreements ushered in a decade of prosperity and the World Bank estimates that North America has achieved an integration level of 50 percent. But for the European Union the integration level is 73 percent and in Asia it is 53 percent. We have to do better.

Today, Canada is moving forward again through a series of initiatives designed to both improve our continental platform and open new opportunities abroad.

We are in the midst of over fifty trade and investment negotiations.

A comprehensive agreement with the European Union should be ready by Christmas. We are on the verge of admission into the Trans Pacific Partnership. We just signed an investment agreement with China and we are now looking at a bigger deal.

But, for Canada, our best market, and the biggest market in the world, is the United States. Last December, Prime Minister Harper and President Obama created a framework agreement around two initiatives: Beyond the Border and the creation of a Regulatory Cooperation Council.

Beyond the Borders is making progress in creating a new code that should speed along the legitimate travel of people and goods. The Regulatory Cooperation Council is designed to lift the ‘tyranny of small bilateral differences’ that currently apply to everything from our orange juice to the Cheerios that US Ambassador Jacobson eats for breakfast.

The critical test in these initiatives will depend on an attitudinal change in those who administer our borders. The current approach puts the emphasis on enforcement and security with zero tolerance. That mindset must change to reflect the principle of risk management and to recognize that expediting the flow of people and products is vital to our economic security.

Business leadership is ahead of the curve. They already design their production on continental lines and through global supply chains.

Last week, in Washington, members of the Canadian Council of Chief Executives, led by chair Hartley Richardson and CEO John Manley, met with the Business Round Table and Mexico’s Consejo Mexicano de Hombres de Negocios to discuss North American competitiveness, trade, and energy. They endorsed their nations’ membership in the TPP, and encouraged governments to move on border access and regulatory reform and to smooth the permitting of shared energy projects and infrastructure.

Experience also demonstrates that progress depends on regional experimentation and pilot projects – like the smart driver’s license that expedites the flow of travellers across our borders. What seems impossible when viewed from our federal capitals, Washington or Ottawa or Mexico City, is often quite doable from a local or regional lens.

The evolution of our ‘hidden wiring’ – our premiers and governors with legislators from our 96 states and provinces all of whom either enjoy or share constitutional responsibilities for trade, transportation, resources, education and the environment – has been vital to both continental integration and opportunities abroad, as Premier Selinger demonstrated earlier this month when he joined fellow premiers in a trade mission to Asia.

The catalysts for action are the cross-border organizations, especially those with a functional mandate like NASCO. They keep the ball moving forward by bringing the players together, through generating new ideas and by maintaining focus on what needs to be done,

We must avoid the siren call of protectionism. When borders become choke-points, production lines slow and the prosperity of all partners is diminished. Beggar-thy-neighbor policies like ‘Buy America’ or ‘Buy Canada’ cost taxpayers and do little to protect jobs.

Protectionism is rooted in the false belief that we can’t compete. It is a defeatism that defies our collective heritage. The North American story is built on beating the odds through a can-do attitude and communities working across borders for mutual prosperity.

The North American idea is ready to go the next step. It is not the EU model but rather a North American idea: three sovereign nations committed to a platform based on shared production, access to markets, and making efficient use of our labour and resources.

On sharing diplomatic space

      Comments Off on On sharing diplomatic space

From the National Post September 24  Opposition outrage aside, joint embassies with U.K. are ‘a no-brainer,’ experts say

Ottawa’s decision to share embassy space and resources with Britain, greeted with condemnation by opposition leaders on Monday, is in fact what some observers call a no-brainer: a logical way to expand Canada’s foreign presence without spending all the taxpayer dollars that go into bricks and mortar.

“This is innovative thinking that will allow us to keep our diplomatic footprint in an age of austerity,” said Colin Robertson, who served as a Canadian diplomat in the U.S. and Hong Kong for 33 years.

The move will see Canada and Britain share space and collaborate on consular services in a “handful of areas” where Canada or Britain does not already have its own mission, Foreign Affairs Minister John Baird said in a joint statement with British Foreign Secretary William Hague.

Mr. Baird said the agreement does not list targeted embassies, but for starters he said Britain will send staff to Canada’s mission in Haiti and the Canadian ambassador to Burma will continue to work out of Britain’s embassy there.

“It is about speed and flexibility, practicality, saving the taxpayer money in both countries, but also being able to operate effectively in a networked world … where we need to be present in more places than ever before,” Mr. Hague said.

Beyond stressing the two countries’ shared values and a mutual desire for a strong presence abroad, Mr. Baird and Mr. Hague said the agreement will also rein in costs. In its March, 2012, budget, the Conservative government promised to save $80-million by restructuring foreign properties and missions as part of a larger plan to find almost $170-million in annual savings.

“Because it’s Britain, everybody has different feelings about [the agreement]; some of us have a soft spot for the old empire and some of us don’t like Britain,” said Gregory Thomas, federal director of the Canadian Taxpayers Federation. “But at the heart of it is the reality that there are so many cities and countries where Canadians need consular services, and having a Canadian office in every one costs a lot of money. To us, it seems like a sensible step.”

Mr. Robertson called the hybrid approach “smart diplomacy” because Canada cannot advance its foreign policy from the confines of Ottawa — it needs on-the-ground representation wherever Canadian interests are at stake.

“If money is the issue, why wouldn’t we co-locate with Britain?” he said. “It’s like a person moving from a house to a condominium: it doesn’t change your identity … This is a no-brainer.”

What you need to know about APEC

      Comments Off on What you need to know about APEC

from ipolitics September 8, 2012 A Canadian Primer to APEC

On Saturday and Sunday, Prime Minister Stephen Harper will attend the 20th Asia-Pacific Economic Cooperation (APEC) leaders’ meeting in Vladivostok, Russia. The theme for this year’s meeting is “Integrate to Grow, Innovate to Prosper.” Here, former diplomat Colin Robertson offers a primer on what APEC is, why it matters, and what Canada wants out of the weekend.

What is APEC?

Established in 1989, the objective of the Asia-Pacific Economic Cooperation (APEC) forum is to facilitate regional economic growth and prosperity through trade and investment liberalization, business facilitation and economic and technical cooperation. Its ultimate goal is a Free Trade Area of the Asia-Pacific.
Canada is an original member of APEC. We hosted the 1997 Leaders’ summit in Vancouver; an event that, in addition to its substantive work to address the Asian financial crisis (and push back on protectionism), provided for the admission of Russia, Peru and Vietnam. It earned domestic notoriety because of the use of pepper spray to quell demonstrators.

In addition to Canada, the other ‘member economies’ (a finesse to Chinese sensibilities around the status of Taiwan and Hong Kong) are Australia, Brunei, China, Chile, Hong Kong, Indonesia, Japan, Mexico, Malaysia, New Zealand, Papua-New Guinea, Peru, Philippines, Russia, Singapore, South Korea, Taiwan, Thailand, United States, and Vietnam.

APEC can be seen as a regional complement to the World Trade Organization and a counterpart to the G-8 and G-20. Like the G-8/20, APEC hosts a series of functional meetings leading up the leaders’ summits, including finance and other economic ministers, business leaders, and senior officials.

Like the WTO, APEC decisions are made by consensus and commitments are undertaken on a voluntary basis. This is both its strength and its weakness; progress can be glacial.

The APEC Secretariat and its Policy Support Unit is based in Singapore. There are APEC study centres throughout the member economies including at the Asia Pacific Foundation in Vancouver.

APEC draws advice from the APEC Business Advisory Council (ABAC), created in 1995 in acknowledgement that business is vital to creating prosperity.

Does APEC matter?

Yes, it has been a useful forum, especially in its early years, for advancing trade liberalization within Asia and as a talking-shop, especially since leaders began meeting annually in 1993.

It aims to be the pre-eminent economic forum in the Asia Pacific, but it still has a long way to go. Like other international organizations, it is long on aspirations but less successful on outcomes. It still has to decide on its future membership. India, for example, is not a member and there are other Latin American countries that also border on the Pacific that have not been admitted.

APEC has set itself some useful goals to achieve before the end of 2015, specifically:

  • 10 percent improvement in supply chain performance through the identification and redress of chokepoints;
  • 25 per cent reduction in the cost of doing business; and
  • reduction of applied tariff rates to 5 per cent or less on products that support green growth.

Does APEC matter for Canada?

Any chance to rub shoulders with Asian leaders is valuable, especially as we see opportunities for Canadian business. In this part of the world, relationships between national leaders are important in advancing commercial interests. In the PMO announcement that he would attend the summit,  Mr. Harper said that, “Increased exports to the Asia Pacific region are vital to Canada’s future prosperity.” To help set the table for the leaders summit, trade ministers, including International Trade Minister Ed Fast, met earlier in the week in Kazan, Russia.

Home to 40 percent of the world’s population, APEC’s 21 member economies account for 56 percent of world GDP and 47 percent of global merchandise trade.

Trade between Canada and APEC economies (according to the useful DFAIT site) was worth $654.4 billion in 2010, an average annual growth rate of 3.5% since 1994. Investment in Canada by APEC economies for the same period rose by 7.1% per year to reach $343.3 billion in 2010. Outward Canadian investment in the Asia-Pacific region grew to $321.8 billion in 2010, an average annual growth of 7.9%.

The importance of the Asia-Pacific region was underlined in a Nik Nanos poll taken in June (and released this week) which reported that in ‘thinking about Canada’s future prosperity’, more than one third of Canadians think the region holds the ‘most economic opportunity’ for Canada:

  • Asia Pacific: 35.2 per cent
  • The United States: 23.0 per cent
  • Europe: 9.0 per cent
  • Central and South America: 5.7 per cent
  • Africa: 1.7 per cent
  • Unsure: 25.4 per cent

What do we want out of the meeting?

As the PM noted in the PMO announcement of his visit, the APEC agenda includes four priority areas: “expanding trade and investment liberalization and increasing regional economic integration, strengthening food security, establishing reliable supply chains and fostering innovative growth” all of which are Canadian trade policy objectives.

There are a series of initiatives currently underway including Canada’s Asia-Pacific Gateway Corridor Initiative, Trans-Pacific Partnership negotiations, free trade negotiations with Japan and Korea, and the launch of free trade exploratory talks with Thailand.

Discussions with and about China will be important, including a likely discussion with Chinese President Hu Jintao.

Prior to his arrival, Mr. Harper attended the Bloomberg Canada-Asia Dialogue in Vancouver and in an interview with CBC he remarked, “We want to see this economic relationship continue to expand,” he said. “But we want to see it expand in a way that there’s a clear two-way flow and clear benefits for both sides. Win-win to use the Chinese expression.” As the Vancouver Sun reported, Mr. Harper said, “I’ve always taken the view that our relationship with China was not one-sided… including protecting an economic relationship that has been very beneficial to them … We want this economic relationship to continue to expand, but that it expands with a clear two-way flow with benefits for both sides.”

In commenting on the China National Offshore Oil Corp (CNOOC) initiative to purchase Calgary-based oil company NEXEN, Mr. Harper observed, “We can’t make it a prerequisite of doing business that they’ve got to become just like us. But we do have to accept that there are differences and factor those differences into how we conduct ourselves.” Mr. Harper added that, “In making a decision the government has to put in place a pretty clear policy framework that indicates why it would or would not accept this decision or subsequent such decisions … the most important thing is that we have rules in Canada that are respected … It is up to the Chinese to display a willingness to play within our rules.”

How does APEC fit with TPP, ASEAN and the East Asia Summit?

Think of APEC as the lead regional economic association, itself still in development.

The Trans Pacific Partnership is an effort by a smaller group of nations – Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the United States – committed to achieve a higher standard of trade and economic liberalization that will also address and set rules around such issues such as intellectual property, including digital technologies, and investment by state-owned enterprises. The TPP took wings when President Obama decided in November 2009 that it would be the ‘leading integration initiative’ for the US in the Pacific. Canada and Mexico won admission to the TPP at the Honolulu APEC summit in November 2011 and we are currently awaiting the outcome of deliberations by the USTR before we will formally join the discussions. The TPP is currently holding its 14th round of negotiations in Leesburg, Virginia.

Created in 1967, ASEAN (Association of Southeast Asian Nations) is as much geo-political as economic and includes original founding members Indonesia, Malaysia, the Philippines, Singapore, Thailand and now Brunei, Myanmar, Cambodia, Laos and Vietnam. It includes a web of regular, functional sessions including defence and security that will be instrumental in containing potential conflicts, such as disputes in the South China Sea.

The East Asia Summit of leaders began in 2005. It follows on the heels of the ASEAN Leaders meeting. It includes the ASEAN nations as well as China, Japan, South Korea, India, Australia and New Zealand and since 2011, the United States and Russia. It should be our next target for membership given its potential as a forum for discussion of broader trade and security issues. As US Secretary of State Hilary Clinton remarked in July at the most recent East Asia Summit in Phnom Penh, Cambodia, “We support the East Asia Summit as the Asia Pacific’s premier institution for political and strategic issues, the capstone of an increasingly mature and effective regional architecture.”

For further reading on Canada and the Pacific:

Start with the latest Policy Options magazine that includes a series of excellent essays written to coincide with the Pacific Century conference hosted by the Canadian Council of Chief Executives. The CCCE has commissioned a series of reports including Wendy Dobson’s ‘Canada, China and A Rising Asia’ all available on the CCCE website. For two brief perspectives, look at Hugh Stephen’s Asia-Pacific: Let’s Get Back in the Ring and China’s Shadow by Roger Girouard, both available on the CDFAI website. There is also a new very good report, ‘Securing Canada’s Place in Asia: Means, Institutions, Mechanisms’, prepared by Don Campbell, Paul Evans and Pierre Lortie for the Asia Pacific Foundation as part of its National Conversation on Asia. Look also at Securing Canada’s Global Economic Future, prepared recently by Derek Burney, Fen Hampson, Tom D’Aquino and Len Edwards, at the Norman Paterson School of International Affairs, Carleton University.

Canada and the North

      Comments Off on Canada and the North

From The Ottawa Citizen,  ‘Canada’s Place in the Mystical North’

August 27, 2012  (also in the Edmonton Journal August 28)

Prime Minister Stephen Harper’s annual tour, coincident with the Canadian Forces’ Operation Nanook, guarantees that, at least for a week, southern Canada looks to our North.

This year the western scenario of the Forces exercise involved a barge carrying toxic chemicals colliding with a ferry shuttling travellers across the Mackenzie River, obliging the evacuation of Tsiigehtchic. Last year, the scenario involved a plane accident that sadly turned to reality with the First Air flight crash near Resolute Bay.

In situations such as this, while the civil authorities lead, as we have witnessed through disasters in the south, be it forest fires, ice storms or hurricanes, it is our Forces that have the necessary capacity to support and respond to environmental and other calamities.

Operation Nanook is the most visible of ongoing exercises directed from Joint Task Force North in Yellowknife.

Critics describe these activities as “militarization” of our North.

They are wrong.

We face no imminent threat to our Arctic sovereignty. The real challenges — bears and black flies, ice, cold and permafrost — are the same that confronted explorers such as Alexander Mackenzie and Sir John Franklin. These exercises are more about safety and security than defence. They are about useful tasks such as landing an RCAF Twin Otter, the “farm truck” of the North, on the Dempster Highway.

Historically, our attention to the North has been mostly in reaction to American interests, real or imagined. The Second World War gave us a highway to link Alaska with the lower 48 states. The Cold War created a dotted network of radar stations — the DEW line — that on the map gave the appearance of presence, however illusory. The SS Manhattan’s 1969 voyage through the Northwest Passage sparked a debate around the right of passage.

American interest has also been a driver for economic development from the Gold Rush to the Mackenzie Valley pipeline. The former obliged us to provide order, through our Mounties and territorial government. The pipeline proposal sparked the Berger Commission that put a moratorium on development. It served as an impetus for the negotiation of northern land claims allowing aboriginal peoples to take greater control of their lands and lives.

Local governments have spawned economic development agencies such as the Inuvialuit Regional Corporation, chaired by former NWT premier Nellie Cournoyea. These kind of institutions, administered by and for northerners, that will be best equipped to deal with sustainability and address the social ills: drug addiction; alcoholism; and a suicide rate five times that in the south.

Hunting and fishing will always be part of northern tradition and way of life, but there is a recognition that change is coming because of rising temperatures and technological innovation giving greater access to the riches of the North. There is a determination an economic base providing jobs with a future, that goes beyond tourism. This puts a premium on education. It also means, as recommended recently by the Canadian Council of Chief Executives, welcoming investment and resource development on the basis of full partnership.

Industry should consult the Canadian Forces, which have both practical experience and expertise in dealing with northerners and their unique governance structure. The Canadian Rangers, for example, successfully draw on the talent of northerners in service of their communities as well as the Canadian Forces.

For Canadians, the North has a mystical appeal. Space seems infinite while time is measured less by the clock than by the sun and the seasons.

With most of us huddled within a hundred miles of the 49th parallel, our real frontier — north of 60 — is a place where the population is smaller than Prince Edward Island’s. The land mass — 40 per cent of Canada — is bigger than Europe. The cultural and demographic differences between the territories — in the Northwest Territories, for example, there are 11 official languages — obliges patience. Building trust takes time.

We come from all corners of the globe but geography and climate define us as people of the north. We correctly celebrate our “true north strong and free” in our art and literature.

We may think we know all we need to know about the North.

We don’t.

Yet we do have experts in our universities, within industry and the public service. Connecting these dots of knowledge and creating more Canada Research Chairs devoted to study of the North would be useful initiatives by the Conservative government. We could use this expertise as we re-take the chair of the Arctic Council in 2013.

Initiated as a “high-level forum” through the Ottawa Declaration in 1996, the eight-nation Arctic Council is useful. It was the catalyst for the 2011 search and rescue mutual co-operation agreement.

We should use our two-year term as chair to give a voice, as observers, to other nations with northern interests, especially China, whose goods will eventually transit polar routes. The inevitable opening of new sea lanes is another incentive to get moving with the construction of our icebreakers and Arctic patrol ships.

It’s also a reminder to avoid the folly of flag-waving, especially as we prepare to submit our extended continental shelf claim to the UN. The brouhaha with Denmark over Hans Island and then that created when the Russian submersible Artika planted a flag near the North Pole in 2007 are less diplomatic crisis than opera bouffe.

To prevent such silliness from escalating, let’s institutionalize the meetings at the chief-of-staff level begun in Goose Bay earlier this year by General Walter Natynczyk.

There is a map in Inuvik airport of the circumpolar region. Sitting atop the world it is a graphic reminder that Canada has both place and stature in the North. Let’s continue to exercise it.

Managing the US relationship

      Comments Off on Managing the US relationship

From The Globe and Mail Wednesday, Aug. 08 2012

Canada has to master the complexity of the U.S. political system

by Allan Gotlieb, Michael Kergin and Colin Robertson (For an interview between Robertson and  RCI’s Wojtek Gwiazda go to RCI site).

In three months we will wake up to see who Americans have elected as president, to the House of Representatives and a third of the Senate. We will be deeply affected by the results, whatever the political stripe of those who occupy the White House and take control of the two houses of Congress. Like it or not, Canadians do have a “dog in this hunt.” Geography, history, economics and culture have created a deep integration that goes far beyond a typical foreign relationship.

Condoleezza Rice, then national security adviser to George W. Bush, captured it well when she said, “Here come the Canadians with their condominium issues.” Not meant as a compliment, it was uttered in frustration at what administration officials felt was the picayune nature of the issues that we were bringing to the table. They were “domestic” – trade and commerce, transportation, energy and the environment, rather than the traditional statecraft of war and peace.

In terms of Canada’s national interests, however, the important issues are the picayune ones that deal with pipelines, dams, bridges, beef, lumber and the quality of the air we breathe and water we drink. This is a tribute to the maturity of a relationship in which it’s been almost 200 years since we last fired shots at each other. Would that the rest of the world had reached this stage of what Franklin D. Roosevelt described as “good neighbourliness.”

It is true, of course, that our relative dependence is asymmetrical – we depend on the United States as a market much more than it depends on us. But it is also true that we are their biggest foreign market – and there is nothing picayune about that.

Three inescapable truths emerge from our high degree of integration:

1. Most Canada-U.S. conflicts emerge as a result of the U.S. domestic, not foreign policy, agenda.

2. Their outcome derives from the uniquely American doctrine of the separation of powers, the Congress being primus inter pares. Our diplomacy must be based on these constitutional realities but also on the equally important truth – to borrow from Lord Palmerston – that in the Congress of the United States, Canada has no permanent friends, only permanent interests.

3. The initiative will almost always lie with Canada to make sure the issue is on the White House agenda.

More than any other country, Canada has to master the complexity of the U.S. political system. Unless we do, little progress will be made on most issues. There are too many players (every congressman a foreign minister), too many special interests, too many bureaucrats, too many lobbyists at the doors of Congress and the White House, too fragmented a power structure and too much truth in Tip O’Neill’s dictum that “all politics is local.”

Although the party affiliation of U.S. legislators or officials can sometimes be important, it becomes far less so than the sensitivities and skills with which the major issues in the relationship are handled.

For all these reasons, we need to take the long view in determining whether our challenges are being successfully met. Relationships are vital, especially between the president and prime minister, but narrowly defined special interests can sometimes trump the national interest. No better example can be found than the devastating softwood lumber dispute, which originated in Ronald Reagan’s first term and has continued for 30 years and counting. It took about a decade for our prime minister to persuade the same president and his successor to reverse his country’s position on acid rain. A protectionist tariff on shakes and shingles imposed by the U.S. almost derailed free-trade negotiations. Yet, as Brian Mulroney demonstrated, Canada never had a friend in the White House greater than Ronald Reagan.

Today there is frustration with President Barack Obama’s unfortunate decision to punt the Keystone XL Pipeline permit until after the election, but like shakes and shingles, this had everything to do with U.S. domestic politics rather than the national interest. Canada was collateral damage, which may yet prove temporary. Fortunately, on the issue of border access, which is of great strategic importance to Canada and on which the President has staked out a leadership role, we seem to be making steady, if slow, progress. When it works, that is how it works.

For a foreign power, the challenge of dealing with Congress is even more difficult. We tend to be treated as just another special interest, but one that cannot contribute to campaigns. As far as the White House is concerned, Canada is usually not seen as a problem. But this means we are rarely, if ever, top of mind. It is doubtful that an American president, who begins each day with a national security briefing, spends an hour a year thinking about Canada.

So we work the system, using all our access points, starting with our able ambassadors. But regardless of the frustrations, experience tells us that the best card that any Canadian prime minister has to play is his ability to talk directly to the president and engage him in those picayune condominium issues that come with sharing a continent.

Allan Gotlieb and Michael Kergin are former Canadian ambassadors to the United States and senior advisers at Bennett Jones LLP. Colin Robertson is vice-president of the Canadian Defence and Foreign Affairs Institute and senior adviser to McKenna, Long and Aldridge LLP.

On Canada’s Submarines and defending our maritime waters and commerce

      Comments Off on On Canada’s Submarines and defending our maritime waters and commerce

From the Ottawa Citizen, July 30, 2012 and the Vancouver Sun July 31

This month a Canadian submarine sank a U.S. warship. It was not part of the events around the commemoration of the War of 1812. Rather, HMCS Victoria demonstrated Canadian submarine capability by torpedoing the decommissioned USS Concord in waters off Kauai, Hawaii, as part of this year’s Rim of the Pacific (RIMPAC) exercises.

Begun in 1971, RIMPAC is designed to enhance the interoperability of participating forces in operations ranging from full combat, mine clearance, anti-submarine warfare, piracy interdiction and disaster relief. As Washington cements its strategic shift toward the Pacific, and we pay more attention to the North Pacific and the South China Sea, muscle-flexing exercises like RIMPAC will only grow in importance.

RIMPAC is the world’s largest international maritime exercise. It lasts six weeks and involves 42 ships, six submarines, more than 200 aircraft, and 25,000 men and women from 22 nations in addition to the U.S. and Canada.

Canada has participated in every RIMPAC and this year 1,400 Canadian sailors, soldiers and air staff are part of the exercise with Canadians in senior command positions. Governor General David Johnston witnessed part of the operations while aboard HMCS Ottawa.

With the rise of Asia, more and more commerce transits the Pacific to North America. It is the world’s busiest container route and this will only increase with the negotiation of trade agreements such as the Trans-Pacific Partnership.

Vancouver is the busiest port in Canada and we are making improvements to this vital gateway as well as to Prince Rupert. Regardless of oilsands pipeline proposals, shipping in and out of our West Coast ports is going to increase.

It is estimated that 90 per cent of international commerce moves by sea. We look to our Forces, especially the Royal Canadian Navy, to secure the safe passage of our sealanes and to contribute to collective security on the high seas.

Our refurbished submarines are an important addition to our naval capacity and our ability to both defend our waters and to project power. In his splendid The Price of Admiralty, military historian John Keegan describes the submarine as the “predominant weapon of power at sea.”

Looking forward Keegan concludes, “it is with the submarine that the initiative and full freedom of the seas rests.” This is the strategic context in which HMCS Victoria and her sister boats, Windsor, Corner Brook and Chicoutimi will operate. This is the strategic reality Prime Minister Stephen Harper recognized in his May speech when he said that, “Canada and its economy float on salt water.”

That is why the government has committed to cutting steel on a new generation of warships with the announcement in June of the National Shipbuilding Procurement Strategy (NSPS). It would be the largest military procurement in modern Canadian history.

Our national motto, From Sea to Sea, celebrates our oceans and our coastline — the longest in the world, enough to circle the equator six times.

But for too long we have done defence, especially of our waters, on the cheap. We spend about 1.4 per cent of GDP: well behind the United States (4.7 per cent), the United Kingdom (2.6 per cent) and even Australia (1.7 per cent). In terms of usable naval power we are situated in the bottom half of the second 10.

The Canada First Defence Strategy aims to redress this and earmarking the dollars through the NSPS should re-establish our shipbuilding capacity and bolster our naval power into the mid-century.

Yet we live in an impatient age.

The time and cost that it has taken to refit and make operational our submarines has stretched beyond what was originally envisaged but, in underwater operation, there is no margin for error.

Defence procurement is a mug’s game that frustrates all involved because of the long time horizons and the sophistication of the weapons systems. Who can predict, for example, the price of copper in 2020? Or a game-changing new technology or shift in the strategic environment, including climate change?

Squaring the circle between defined budgets, constantly evolving weapons systems and the strategic environment is the unhappy dilemma of defence establishments in democracies.

But prepare we must because when disaster or mayhem strikes, whether natural or man-made, Canadians expect that we will be “Ready, Aye, Ready.”