NAFTA: Next Steps

NAFTA’s enduring lesson: Never forget your neighbours

Special to The Globe and Mail Wednesday, Nov. 13 2013

Colin Robertson

Twenty years ago, Americans and a lot of Canadians tuned in on a November evening to watch Larry King host what turned out to be seminal debate on free trade. It pitted then U.S. vice president Al Gore against Ross Perot.

Mr. Perot, the irascible Texan, was riding a wave of popular discontent with his warning that Americans should listen for a ‘giant sucking sound going south’ as jobs fled to the Mexican maquiladoras. The appeal netted him 19 per cent of the popular vote in the 1992 election, making him the most successful third party challenger since Teddy Roosevelt in 1912.

Gore dismembered Perot in debate and subsequently, support for the Clinton administration’s NAFTA legislation rose from 34 per cent to 57 per cent; the debate contributed to its passage a week later in the House of Representatives.

NAFTA worked.

All three nations enjoyed a decade of prosperity that created jobs and balanced budgets. North America’s share of world trade rose to 36 per cent before receding, in face of recession and the rise of Asia, to 25 per cent.

Unfortunately, the continued fear-mongering of Mr. Perot, Ralph Nader and Pat Buchanan – described by Republican leader Bob Michel as the ‘Groucho, Chico and Harpo of the opposition’ – took root in the United States. Flaring up during presidential primaries, NAFTA became, inaccurately, a code word for job loss.

After Sept. 11, security trumped trade as the U.S. ramped up its border presence, tripling budgets to build walls on its southern border and launching drones to patrol its northern frontier.

NAFTA leaders’ meetings, when held, have become competing conversations – one between the Canadian prime minister and the U.S. president and the other between the U.S. and Mexican presidents.

By necessity, the energy for trilateral reform requires the personal leadership of the U.S. president as both George H.W. Bush and Bill Clinton demonstrated on NAFTA.

George W. Bush launched the Security and Prosperity Initiative, but its scope was too broad and the vigor required was too little. Barack Obama shelved it, endorsing a bigger deal with the Pacific, as part of the U.S. pivot, or rebalance, towards Asia.

Given the deep economic integration, it would have made more sense for President Obama to caucus first with his North American counterparts. If you can’t define a relationship with your neighbours, how can you define a relationship with the world?

Our political leadership sometimes fails to appreciate what our business community already understands: Our mutual competitiveness depends on working together.

Global positioning starts with getting our act together in the neighborhood.

Bob Pastor, tireless champion of the North American idea, recently hosted a conference in Washington that brought together business, legislators, civil society and the key officials from all three countries.

The conference released a survey showing that in all three countries there is strong support for trilateral free trade.

A series of practical suggestions were offered including:

- Resurrecting a high-level business advisory group that is more than just a photo opportunity.

- Given that there is no appetite or money for the new institutions, using more effectively those already in place, notably the Commission on Environmental Cooperation, and the moribund Commission for Labor Cooperation.

- Develop a North American climate strategy that the leaders can take to the international table. Why not, for example, an international price on carbon, starting with North America?

- Better high-level coordination within government and across governments (including states, provinces and cities) to maximize and sustain continental collaboration.

A coalition to inform and educate at the regional and community level will be led by the highly effective Pacific Northwest Economic Region and the Border Trade Alliance.

The recent announcement by U.S. Commerce Secretary Penny Pritzker, Mexican Economy Minister Ildefonso Guajardo and International Trade Minister Ministers Ed Fast to work on a ‘constructive agenda’ is encouraging. It needs to look at better coordinating infrastructure and transportation grids, including pipelines, roads, rail and ports.

A take-away from the recent Canadian American Business Council conference in Ottawa is the requirement for a continental approach to talent, including co-ordinating training and skills development.

There are other efforts underway, including a Council of Foreign Relations Task Force led by David Petraeus and Robert Zoellick. They should start by reading the CFR’s 2005 report led by co-chairs John Manley, Pedro Aspe and William Weld.

Twenty years on, the best tribute to NAFTA’s enduring success would be a forward-looking strategy. Next spring the leaders will meet in Mexico. Their challenge: a plan to build a North American century.

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

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Primer to the G20 in St. Petersburg

The Rumble in Russia: A G20 primer iPolitics Insight

By | Sep 5, 2013 2:02 pm | iPolitics Subscription Required | 0 Comments

A general view of the round table meeting at the G-20 summit in St. Petersburg, Russia on Thursday, Sept. 5, 2013. The threat of missiles over the Mediterranean is weighing on world leaders meeting on the shores of the Baltic this week, and eclipsing economic battles that usually dominate when the G-20 world economies meet. (AP Photo/Sergei Karpukhin, Pool)

Today and tomorrow, the leaders of the major economic nations, their finance ministers and central bankers will meet to discuss global economic and financial issues in St. Petersburg’s Constantine Palace.

The summit takes place against the backdrop of the Syrian crisis and the recent coup in Egypt; these issues inevitably will spill over into informal discussions. On the economic front leaders face the challenges of joblessness, especially youth unemployment in Europe, the relative slowdown in the Chinese economy with its attendant effects on other developing economies, and the sluggish recovery in developing nations. We are also witnessing competitive devaluations and the creeping rise of protection.

Meet the G20

The G20, originally a meeting of finance ministers, their deputies and central bankers, was formed in 1999 in the wake of the Asian and Russian financial crisis with then-Finance Minister Paul Martin playing a lead role. It was raised to the leaders level in the wake of the 2007-2008 financial crisis when President George W. Bush convened a summit in Washington in November, 2008 to address the economic crisis.

G20 leaders reconvened in London (April, 2009) in Pittsburgh (October, 2009) in Toronto (August, 2010) in Seoul (November, 2010), in Cannes (November, 2011) and in Los Cabos, Mexico (June, 2012). Next year’s G20 will be hosted by Australia.

The leaders’ summit is the culmination of a year-long process of meetings which — in addition to the discussions of central bankers, finance ministers (whose meetings under Russian leadership also included labour ministers) and sherpas — includes sessions involving representatives of labour, business, think-tanks, youth, girls (Belinda Stronach was a driving force behind the Girls 20 summit) and civil society.

The member countries include the G8 nations — Canada, United States, Japan, France, Germany, Italy, the United Kingdom and Russia — as well as Argentina, Brazil, Mexico, Australia, China, India, Indonesia, Korea, Turkey, Saudi Arabia and South Africa. Their economies cover two-thirds of the world’s population and account for over 80 per cent for world trade and global production.

The heads of the International Monetary Fund and World Bank participate, as do the heads of the European Union and European Commission and the head of the European central bank. Other national leaders also have been invited to discuss specific topics, such as development.

The G20’s ‘standing’ agenda

The G20 has developed a de facto standing agenda. First item on that agenda is the restoration of a multitlateral trading system. Expect leaders to address the topic, but there is no sense the WTO Doha Round will be concluded soon. Today, movement on multilateral trade rests with the Trans-Pacific Partnership and a series of smaller regional groupings.

Another item on that agenda is protectionism. The 2013 Global Trade Alert observes that over 3,330 new government protectionist measures — trade remedies, local content requirements, discriminatory regulatory practices — have been reported since 2008. A record 431 measures were imposed in the last year in what the GTA calls “a quiet, artful, wide-ranging assault on free trade”.

The G20 nations account for 65 per cent of protectionist measures, notwithstanding their pledge for a ‘standstill’ at the London 2010 summit.

The agenda also includes international investment. Barriers to investment continue to plague G20 economies. Governments need to further open their economies.

Another agenda item: fiscal policy. This means saving in good times so you can spend in recession and then get back to balance as quickly as possible.

Finally, there is sustainable development. It is easy to look at the Millenium Development goals as a glass half-empty. However, significant progress has been made in increasing the resources of international financial institutions, building infrastructure, improving food security, financial inclusion and reducing the cost of remittances.

Developing countries now account for more than half of the world’s economic activity and more than half of global exports. China is now the number one world exporter. A recent report from the Lowy Institute argues that development and global economic issues must be ‘mainstreamed’ into the G20’s core agenda.

What does the St. Petersburg summit want to achieve?

On the website created for St. Petersubug, Russian President Vladimir Putin said that he had two objectives for the summit: achieving balanced growth and job creation. The ‘watchwords’ of the meeting will be:

  • Growth through quality jobs and investment;
  • Growth through trust and transparency;
  • Growth through effective regulations.

Eight priority areas have been identified:

  1. A framework for strong, sustainable and balanced growth;
  2. Jobs and employment;
  3. International financial architecture reform;
  4. Strengthening financial regulation;
  5. Energy sustainability;
  6. Development for all;
  7. Enhancing multilateral trade;
  8. Fighting corruption.

What is it likely to achieve?

Don’t expect a lot. Watch for action on the following:

Implementation of the IMF’s 2010 Quota and Governance Reform. IMF Executive Director Christine Lagarde says that “completing the 2010 quota and governance reform is essential to the Fund’s legitimacy and effectiveness.” It requires a doubling of the IMF quota resources and reviewing the IMF quota formula in order to adequately reflect the current weights of its members.

Resurrecting the Doha Round. Currently on life support, a global agreement could result in GDP increases of approximately $960 billion and create over 18 million jobs worldwide, according to a study by the Peterson Institute’s Gary Huffbauer and Jeff Schott prepared for the International Chamber of Commerce. At their April meeting in Doha, the ICC argued for progress in five areas:

  • Concluding a trade facilitation agreement;
  • Implementing duty-free and quota-free market access for exports from least-developed countries;
  • Phasing out agricultural export subsidies;
  • Renouncing food export restrictions;
  • Expanding trade in IT products and encourage growth of e-commerce worldwide.

Exchange rate and incentives competition. The number of governments competing for foreign investment by lowering their tax rates has increased. As Martin Wolf recently observed, “policies aimed at export-led growth impose contractionary pressure on trading partners, particularly in times of deficient aggregate demand and ultra-low interest rates. In the last decade, we have seen the largest and most persistent exchange rate interventions ever.”

Structural reform. The OECD has encouraged the G20 to embrace structural reforms and a switch in emphasis from politically-charged current account rebalancing to labour product market reforms for medium-term growth and a growing consensus on fiscal frameworks.

The division over how to deal with debt-to-GDP. The U.S. and others favour a more flexible stance. They are not likely to agree on specific quantitative fiscal targets but likely will concentrate instead on reducing debt-to-GDP over the medium term.

What does Canada want?

Prime Minister Harper wants the summit to result “in commitments for further action on key issues such as financial regulation and trade liberalization.”

Our main objectives include commitments toward:

  • Greater transparency: Canada and Russia have co-chaired the G-20 Anti-Corruption Working Group.
  • Accountability: In tracking progress on commitments made at previous G-20 Summits and especially on the Development Working Group commitments established at the Toronto G-20 Summit.
  • Financial sector reform: G20 members have agreed to implement the regulatory requirements of Basel III, the international standard for stronger regulation of the banking sector.

Beyond the summit agenda, a great deal of other business gets done at these meetings. Mr. Harper can be expected to discuss the Canada-Europe trade agreement with European leaders, progress on the Trans Pacific Partnership and the always-important Canada-U.S. agenda with President Obama.

So do we really need a G20?

Yes. The G20 filled a gap in the architecture of top-table meetings.

The permanent members of the Security Council — Russia, China, France, Britain and the United States — represent the world of 1945 and the early Cold War. As we have seen over Syria and other crises, getting the Security Council to act constructively is very difficult. Reforming the Security Council to make it more representative of today’s geo-political situation has been an exercise in futility.

The G-8 group is Eurocentric and does not include China, India or Brazil. So the G-20 made sense.

Like the G8, much of the value of the G20 is in its process. More people will work on the draft of the final communiqué than will actually read it but the process of getting there is what really matters. The ongoing meetings between central bankers and finance ministers (the original G20) now include separate discussions with business, civil society and think-tanks.

What matters at these summits is not the prepared statements at the main table but the frank discussions and informal meetings that take place in the corridors and meeting rooms around the main conference. Winston Churchill, who popularized the word ‘summitry’, observed that ‘jaw-jaw’ between leaders is better than ‘war-war’.

Further reading

The best Canadian sources for G20 documentation with a chronology of past summits is at the University of Toronto’s G20 Information Centre, managed for years by John Kirton. The Center for International Governance Innovation (CIGI) in Waterloo has done excellent work on the G20, especially its priorities for the G20 published for the St. Petersburg summit. This primer owes much to the session recently held at the Rideau Club, moderated by CIGI’s Fen Hampson, with Canadian Council of Chief Executives CEO John Manley, Russian Ambassador Georgiy Mamedov and CIGI’s Domenico Lombardi and Rohinton Medhora.

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Canada and St. Petersburg G20

Harper needs to play the ‘reliable ally’ card at the G20

COLIN ROBERTSON

The Globe and Mail Wednesday, Sep. 04 2013

Prime Minister Stephen Harper goes to the Constantine Palace in St. Petersburg on Thursday for the G20 summit. He has three roles to play: To be a good friend; a reliable ally; and, always, to be our chief diplomat in advancing Canadian interests.

The backdrop to this summit is Syria, especially now that U.S. President Barack Obama has delayed an armed response until he has the sense of Congress.

In Britain, last week’s House of Commons defeat has left a diminished Prime Minister David Cameron. Mr. Cameron will appreciate the advice of the like-minded Mr. Harper, who also understands the challenges of parliamentary government.

Mr. Cameron and his foreign minister William Hague are Mr. Harper’s staunchest foreign friends and supporters. They are also our steadfast advocates within Europe for the stalled Canada-Europe trade agreement.

Mr. Obama is likewise afflicted by Syria. He comes to St. Petersburg seeking allies. He will welcome Mr. Harper’s assistance in building international support to enforce the norm against the regime of Bashar al-Assad for using poison gas.

When blunt language is required, Mr. Obama can count on Mr. Harper, especially during the almost-certain debate on Syrian intervention with Russian President Vladimir Putin. In the lead-up to the Lough Erne G8 summit, Mr. Harper condemned Mr. Putin’s support of the “thugs of the Assad regime” and underlined the “G7 plus one” divide between the West and Russia.

The Harper-Obama relationship is not that of Harper-Cameron, but Mr. Harper understands that the dynamic of a successful Canada-US relationship depends on being a reliable ally.

The Keystone XL pipeline permit process is frustrating but Mr. Harper will recognize that the Canadian ‘ask’ has evolved into another pawn in the polarized world of Washington politics. Mr. Harper can help our cause by giving the President a preview of our forthcoming oil and gas regulations and their contribution to abating climate change.

A useful contribution to collective trade liberalization would see the two leaders recommit to their initiative on border access and regulatory alignment. We need to match the progress we have made on perimeter security with an expedited flow of people, goods and services.

Mr. Harper should push Mr. Obama on country-of-origin labelling, a noxious piece of U.S. protectionism that is effectively blocking Canadian beef and pork exports. It is also an issue on which he and Mexican President Enrique Pena Nieto can make common cause.

Curbing protectionism is a constant challenge. In the last year, the Global Trade Alert has catalogued a record 431 new protectionist measures with the majority imposed by G20 nations. With our economic growth dependent on trade, Canada has vital interests in further trade liberalization.

In his separate meetings with fellow leaders, Mr. Harper needs to advance the Canadian case for the Canada-Europe trade agreement and the Trans-Pacific Partnership.

The Trans Pacific Partnership would cover 40 per cent of global economic output and about a third of world trade. It aims to become the gold standard for other trade pacts. With key leaders present in St. Petersburg, side conversations can help set up progress at the next round in Bali. Canada and the U.S. have both committed to concluding the TPP negotiations this year.

If only the Canada-Europe talks could progress that quickly: Now into their fifth year of negotiations, the Europeans are increasingly skeptical that Mr. Harper wants a deal.

The Europeans thought it would be done by the end of January. The British were ready to run interference for us in Lough Erne but the offer was apparently declined. The European leadership from Brussels will be in St. Petersburg.

Mr. Harper should seize the moment and conclude the deal. When it comes to trade liberalization, half a loaf is much better than none.

European attention is rapidly shifting to the potential deal with the United States, while the EU leadership who have invested in this deal, will change next May with the EU elections.

Credit Paul Martin, Mr. Harper’s predecessor, as the architect of the G20. As Finance Minister, Mr. Martin showed foresight in recognizing that globalization obliged a new, more inclusive forum to act as the clearing house for global financial and economic issues.

The worth of summits is rarely reflected in their communiqués. More will draft that document than will read it. The utility of summitry is the process of consultations leading into the summit and then in the frank talk between leaders when they meet. What happens at the main table is usually less relevant than in the corridor discussions. It is there that things get done.

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Beyond the Border and Regulatory Cooperation A Year On

Beyond the Border, 2013: inching toward a deal iPolitics Insight

By | Dec 12, 2012 9:01 pm

It’s been a year since Prime Minister Stephen Harper and President Barack Obama announced framework agreements on Beyond the Border and the new Regulatory Cooperation Council. While most of the subsequent work has been below the waterline of media interest, let’s look at the progress to date.

Access to the United States market — still the largest in the world and, for Canadians, the most accessible — is an enduring Canadian objective dating back to when we were British North America. A European-style union is not in the cards but a more integrated continental economy, one which includes Mexico, makes a whole lot of sense.

Access to the U.S. has been the trade priority of every Canadian prime minister. Our domestic market is too small to generate the sales we need to put bread on the table and pay for those things, such as medicare, which define what it is to be Canadian.

Defence production led the way under Mackenzie King and Roosevelt. It was followed by the Auto Pact (Pearson and LBJ), the Canada-U.S. Free Trade Agreement (Mulroney and Reagan) and NAFTA (which transitioned from Mulroney/George H.W. Bush to Chretien/Clinton). Some relief from the security curtain imposed after 9-11 was provided by the Manley-Ridge ‘Smart Border Accord’ but the border continued to thicken. The Security and Prosperity Partnership — started by George W. Bush, Paul Martin and Mexico’s Vicente Fox — came to naught.

Mr. Harper had the border on the agenda when Mr. Obama came to Ottawa just after his first inauguration but the issue lost traction. The prime minister had to personally put it back on the president’s agenda – another vindication of Brian Mulroney’s axiom: “If you don’t have a friendly and constructive personal relationship with the president of the United States, nothing is going to happen.”

It is estimated border inefficiencies cost the Canadian economy 1 per cent of GDP, or $16 billion a year — roughly $500 for each Canadian.

So what do our two nations have to show for their efforts a year on, besides some frequent flyer points for civil servants doing the capital shuffle (and not a lot of those, given the bite of austerity)? Three areas stand out: getting goods across the border, easing border congestion, and the process itself.

Supply chain dynamics increasingly account for most of our trade in things like trains, planes and automobiles, soup, and the ubiquitous BlackBerry. Just-in-time delivery is especially critical for the auto trade, still our biggest traded manufacture.

Getting stuff efficiently and quickly across the border is vital for manufacturers. Global production means that more and more of our parts come from Asian workshops. The port closest to those suppliers is Prince Rupert, B.C., where containers are put on trains and shipped south, passing through Portal, Sask., enroute to the industrial hub around Chicago.

Rail cars crossing the border have long been screened for illegal migrants as well as chemical or radiological content — but they’ve still been subject to secondary inspection. Southbound, rail is now handling about 60 per cent of the surface volume (trucks carry the other 40 per cent). Containers arriving at U.S. ports still avoid this kind of rigorous inspection.

Now, joint inspections in Prince Rupert allow faster transit — giving real effect to the principle ‘inspected once, approved twice’. Montreal likely will be the next pilot port for this fast-tracked inspection service, with Halifax and Vancouver to follow. The value of integrated gateways was demonstrated recently when Hurricane Sandy obliged the diversion of cargo to Halifax from East Coast U.S. ports. Halifax was able to double its intake and, between re-transit by sea and more rail cars for land travel, the containers reached their southern destinations with minimal disruption.

For the frequent traveller there are now designated NEXUS lines at most major airports giving ‘fast-pass’ cardholders one less travel headache.

The challenge will be to preserve the pre-clearance facilities at Canadian airports as the fiscal crunch bears down on U.S. departments. Unlike other foreigners, we can remind the Americans that Canadians continue to flock south of the border to spend their money, making more than 21 million visits to the U.S. last year (including 59,619 nights in Florida).

Canadians represent more than a third of all foreign visits to the U.S. Canadians’ annual spending in the U.S. — $24 billion in 2011 — dwarfs the sum spent by Americans stationed in Canada.

We are also beginning to make the border more accessible by constructing new lanes and building facilities designed for easier flow in places like St. Stephen, N.B., and Calais, Maine.

Despite recent blocking efforts, it appears the vital second crossing between Windsor and Detroit is back on track. The trade that crosses the Ambassador Bridge is worth more than all U.S. trade with Japan. National security alone would argue for presidential approval of the necessary waiver and a quick start to bridge construction, which will create thousands of jobs.

The bureaucratic process set in place by the initiatives — especially on the regulatory side — is very promising. Here the Americans are ahead of us. A pair of Executive Orders (the equivalent of cabinet directives) oblige U.S. regulators to demonstrate why they would diverge from complementarity in new regulations with regulatory partners like Canada.

Working groups across the current designated areas are using a sensible schematic in looking at new rules:

  • Is it really required?
  • Is there another way to address the requirement (i.e., data sharing)?
  • For those deemed necessary, can administrative burdens be reduced or eliminated?

There is also a process to re-examine old rules and bring them into line with the new approach. The best net effect would be a change in attitude among those who administer the rules. The current enforcement mentality should evolve into one of common sense and risk-management aimed at expediting people and goods. This alone would be a very positive outcome.

A shrewd Canadian ‘ask’ was for an inventory of border fees and charges. As the U.S. approaches its ‘fiscal cliff’, it’s almost certain that there will be an effort to find alternate revenue sources such as the $5.50 fee levied last October on Canadians entering the U.S. by air or sea as ‘compensation’ for revenue lost under the U.S.-Colombia Free Trade Agreement. We need to be vigilant about new border fees.

After nearly seven years in office, Prime Minister Harper has got to be thinking of his legacy. Beyond the Border and regulatory cooperation would be an historic achievement.

But President Obama also needs this deal. He has pledged to double American exports. The twin initiatives with Canada, America’s biggest trading partner, will advance that goal but it will require continued attention from the president to make it happen.

At a time when questions are being asked about the direction of American policy, the ability of the U.S. to deliver on a deal with Canada will not be lost on officials in Mexico City, the partners in the Trans Pacific Partnership and friends and allies everywhere.

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Harper Foreign Policy

Excerpted from Embassy Harper grips the Diplomatic Reins tightly by Ally Foster
Published: Wednesday, 12/12/2012

tighter, as part of his years-long undertaking to fundamentally rebrand Canada at home and abroad, say former diplomats and other observers.

A look at the scorecard over the past year reveals both diplomatic courting and breakups for Canada. There has been talk of sharing consular digs with the Commonwealth, as well as temporary and permanent boarding up of embassies.

Security reports for missions abroad and foreign policy plans have been leaked, and major foreign investment deals have been made.

In November, Mr. Harper visited India for the second time since being elected in 2006, and also made a second visit to China in February of this year.

In late-breaking news, Mr. Harper announced the approval of the $15.1 billion takeover of Nexen Inc. by Chinese oil giant CNOOC, as well as giving Malaysia’s Petronas oil and gas company the green light to buy Calgary’s Progress Energy, on Dec. 7.

Meanwhile, Mr. Harper laid out rules that will block most foreign ownership of oil sands assets by state-owned enterprises.

Canada expanded its reach in 2012 by announcing in July that it would open its first-ever embassy in Myanmar, also known as Burma, after months of easing sanctions against the country in light of perceived democratic and human rights progress.

But the November leak of the government’s long-awaited foreign policy plan was, according to CBC News, focused largely on trade priorities, to the chagrin of some observers. The CBC also reported that it lacked any mention of prior Canadian foreign policy hallmarks such as peacekeeping and international development.

‘Fundamental rebranding’

This was “not a banner year for Canadian diplomacy,” argued former Canadian diplomat Daryl Copeland, now a senior fellow at the Canadian Defence and Foreign Affairs Institute.

“It’s less…what we did do in the world, than what we didn’t do,” he said, adding this has been part of a growing trend over the past decade.

Nevertheless, he highlighted the breaking of diplomatic ties with Iran, which Foreign Minister John Baird announced on Sept. 7, and Mr. Baird’s decision to temporarily recall Canadian representatives from Israel, the West Bank, and the United Nations after voting against the successful Palestinian bid to become “non-member observer state” at the UN. That effort saw Canada end up in the severe minority, with nine nations voting against the bid, 138 voting in favour, and 41 abstaining.

There has been a “fundamental rebranding of Canada,” said Mr. Copeland—one that shows the country drawing a hard line on issues, as opposed to its previous international reputation as a moderate.

But another former Canadian diplomat, Colin Robertson, said he sees a promising government approach to foreign policy. He wrote in an email of “an increasingly coherent Conservative international [policy].”

He highlighted Trade Minister Ed Fast’s “quiet diligence in promoting trade deals” and Mr. Baird’s “articulation of the Conservative foreign policy.” While Mr. Fast works to tie the knot in trade talks, he argued, “he has been the quiet constantly plodding forward tortoise to John Baird’s Energizer Bunny.”

“Like it or not, John Baird is an authentically Canadian voice on foreign policy. There is no question about us not having a policy.”

Harper in control

The CNOOC and Petronas decisions showed that the Harper government is committed to racing “full speed ahead” into Asia, wrote Mr. Robertson.

He was surprised, however, at “the government’s poor job in selling the Asian strategy,” compared with the amount of time the government talked up its potential trade deal with the European Union.

Meanwhile, Gordon Smith, a former deputy minister at what is now DFAIT, said the government has a “foreign policy that’s driven by the people around the prime minister.”

This has happened with previous PMs, and isn’t entirely new, he added. Even so, he said this Prime Minister’s Office “doesn’t fully trust the public service [and] isn’t comfortable with the kind of advice the public service gives. There’s an uneasiness in that relationship.”

Canada’s relations with the UN are also uneasy, noted Mr. Smith, who is now a distinguished fellow at the Centre for International Governance Innovation.

“The UN obviously is in the dog house with this government,” he said, pointing to Mr. Harper’s decision not to attend the UN General Assembly on Sept. 27, despite being in New York to accept the world statesman of the year award for 2012, presented by the Appeal of Conscience Foundation.

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Canada and the Americas

Americas strategy? It takes three to tango

colin robertson From Tuesday’s Globe and Mail Apr. 03, 2012

Our size and global placement give Canadians multiple perspectives as we compete in the international market. But these advantages too often distract us, at a time when we need to focus and follow-through.

History and early trading patterns make us an Atlantic nation. With half of all new Canadians coming from Asia, we now have a Pacific outlook that we embrace. Our climate is a constant reminder that we’re also a northern country, and the Harper government has made the Arctic a priority.

As we were reminded by Monday’s trilateral summit in Washington, we are also a nation of the Americas. Our propinquity to the United States has always been a challenge – initially around security, then through cultural seduction – as well as an economic opportunity promised by the world’s biggest market.

For most of our history, with the exception of the Commonwealth Caribbean relationships, we avoided our neighbours south of the Rio Grande. It was a Latin land of dictators and revolutions. Besides, since the Monroe Doctrine, the U.S. had staked its hegemony.

NAFTA gave us a serious relationship with Mexico but, as Monday’s summit illustrated, we continue to be a somewhat reluctant partner.

Taking advantage of our shared continent is a good idea, but it requires vision and boldness if we’re to realize the advantage of resources, market and labour. For now, trilateralism is on life support.

As we saw again Monday, these meetings are essentially “dual bilaterals” between Mexico and the U.S. and then, time permitting, between Canada and the U.S. We have to await the outcome of this year’s elections in Mexico and the U.S. before we can revive the North American idea.

Mexico deserves our support in combatting the drug menace as well as in developing its institutions. If we can wage war in Afghanistan and Libya, then surely we can lend a helping hand in our neighbourhood.

We also have increasing commercial interests. The World Bank says Mexico is the easiest place in Latin America to run a business and, by mid-century, Goldman Sachs reckons the country will be the world’s fifth-largest economy, bigger than that of Germany, Russia and Japan.

Meantime, we should be doing useful continental planning around our shared infrastructure – roads and rail, electrical grids and pipelines and at our gateways. And as soon as we fix our made-in-Canada refugee problem, let’s lift the visa for Mexicans.

With the exception of our ongoing commitment to Haiti, Canadian efforts toward the rest of the Americas have been characterized by quixotic spasms of tango-like embrace – joining the Organization of American States and committing to the now-moribund Free Trade Area of the Americas – followed by a long siesta.

The Harper government developed an Americas strategy with an emphasis on democratic governance, prosperity and security. We’ve made progress through a series of boutique trade agreements, but the grand strategy has been slow to take shape. As we approach this month’s Summit of the Americas, it’s ready for a “reset.”

It takes two to tango, and Latin American governments share responsibility for not taking advantage of Canadian interest and opportunities. During Stephen Harper’s visit to Brazil last year, he promised to be ambitious, saying that, for “too long a time we neglected relations. … Too much grass grows in the cracks on the road between out two great countries.”

Ambition is important. But so is perseverance.

Mr. Harper will need to devote more time and energy if we’re to demonstrate that there are more steps in our dance repertoire. The Canadian business community is engaged. Our mining companies are especially active, and our banks have long had a presence in the Caribbean that has since expanded, notably into Mexico.

Business can be a driving force for taking the relationship to the next level. Twenty years of freer trade has given Canadian companies experience and confidence that they can compete on the wider world stage. As we have learned in Asia, however, our commercial interests are advanced when ministers are there to show the flag.

For Canadians, the U.S. market and relationship will always remain No. 1, and we can take some comfort from Barack Obama’s promise on Monday to make the border “faster and cheaper to travel and trade.”

But the slow economic recovery increases the likelihood of renewed protectionism. Even when it’s not aimed at Canada, we are always at risk through collateral damage. It’s why, while we need always to keep our focus on the U.S., we should look to other markets in the Americas, starting with Mexico. And if we’re to keep the grass from growing back in the cracks, we need a good plan, perseverance and senior political level follow-through.

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Trilateral Summit in Washington

From Ipolitics April 2, 2012:  The North American idea

by Colin Robertson,

When Barack Obama welcomes Stephen Harper and Felipe Calderon into the Oval Office on Monday, the leaders will smile and the cameras will click.

But will there be anything more to report than the usual bromides about the need for greater cooperation and collaboration at this latest iteration of the three amigos?

Probably not.

Sadly, the idea of closer economic integration creating an uber-North America — effectively a customs union between Canada, the U.S. and Mexico that would marry resources, labour and market — is on life-support.

For Stephen Harper, the first priority is on making the Canada-U.S. border more accessible, while enthusiastically embracing a ‘Trade R Us’ approach through the Trans-Pacific Partnership, a deal with the European Union and a smorgasbord of bilateral agreements. For Barack Obama, the priority is on creating jobs against what is shaping up as another polarizing election. For Felipe Calderon, the focus continues to be on battling the drug cartels. Calderon is in his last months as president and the July election will likely see the defeat of his party and the return of the long dominant establishment PRI.

Since NAFTA, the continental association has seldom gone beyond a pleasant conversation on aspirations, with a couple of notable exceptions including pandemic planning in the wake of H1N1 or, as it was initially known, the Mexican swine flu. Unfortunately, the substance of the ‘trilateral’ summits quickly descends first into the U.S. relationship with Mexico, because Mexican issues are top of mind for the American president, and then, time permitting, the U.S. relationship with Canada.

This dual bilateralism has left Canadian practitioners with the view that Canadian interests are better advanced dealing directly with the United States. They are mostly right although, as we’re learning yet again in the latest initiative to expedite border access, if getting the framework agreement is difficult, achieving measurable results is an even bigger hurdle. It requires consistent effort and continuing high-level instruction to shift a post 9-11 bureaucratic mindset that has still to understand that you can have both secure frontiers and economic integration.

NAFTA, the anchor for trilateralism, has never enjoyed the popular acclaim that it deserves.

Canada was initially a reluctant partner – we signed on for reasons similar to what is taking us into the Trans-Pacific Partnership – so as to avoid becoming a spoke in the American hub.

For the Americans, the decision was strategic: give Mexico a hand-up that would create jobs, a market and keep Mexican migrants at home. It worked, but only to a degree. Many of the maquiladoras that initially sprung up across the U.S. border have long since been dismantled and reassembled in China. Mexico’s northern states are now a war zone. In the USA, NAFTA has become a synonym for job loss and outsourcing.

It’s too bad because NAFTA did what was intended for all three partners. From 1994-2001, NAFTA trade tripled and foreign investment quintupled among the partners. Intra-regional trade accounted for 46 per cent of the three amigos international trade — up from 36 per cent in 1988.

Then came 9-11.

America reasserted its borders and a combination of the rise of China, slowing economies and the existential war with the cartels saw intra-regional trade slide back towards its pre-NAFTA levels.

At Waco in 2005, George W. Bush tried to revive the trilateral idea with the Security and Prosperity Partnership (SPP). But the SPP suffered from too many little objectives (over 400) without focus or political will. While the North American Competitiveness Council did good work, its pro-business orientation made it an anathema to the new Obama regime and the SPP process petered out.

It’s too bad because a key feature of globalization is the successful development of intra-regional trade – Europe showed the way and now Asia and Latin America are following suit. With labour, resources and the biggest market in the world, North America is well placed.

But it requires a willingness to look at the kind of bold ideas outlined in Robert Pastor’s vision of a continental future, The North American Idea (2011). A tireless champion of the North American idea, Pastor makes a solid argument for a customs union involving labor mobility and coordinated infrastructure, with a special focus on energy and transportation.

The energy dimension is further explored by the Peterson Institute’s Jeff Schott and Meera Frickling. In their useful NAFTAand Climate Change (2011), they recommend harmonized renewable energy standards, regional cap-and-trade regimes, and a coordinated mapping of carbon capture and storage sites.

The ideas are there. So is the potential for growth.

Canadians are well aware of the importance of the U.S. market, but we sometimes forget that Mexico is more than a cheap winter holiday. The World Bank and International Finance Corporation’s Doing Business 2011 report declared this NAFTA partner as the easiest place in Latin America to run a company. The International Monetary Fund says Mexico’s economic growth will eclipse that of the U.S. and Canada from now until 2015, and Goldman Sachs predicts that in 40 years Mexico will be the world’s fifth-largest economy — bigger than Russia, Japan or Germany.

Canadian companies, like Bombardier, RIM and Magna, already have a significant manufacturing presence in Mexico as part of their North American supply chain. Walk down any main street in Mexico City and you are likely to see the red and white signature of Scotiabank, now Mexico’s sixth largest retail bank.

We have opportunities in Mexico and a useful outcome of today’s meeting would be an announcement that we are lifting the visa requirement for Mexicans that was clumsily imposed in July 2009. Designed to assuage our refugee determination system, a made-in-Canada problem, it has since been corrected by legislation.

Alas, in current circumstances there is neither the political will nor popular support for the North American idea. This is why at today’s trilateral summit we should not expect much beyond a photo and aspirational declarations of good intentions.

But, after a two year hiatus, that it is even happening at all is cause for cheer. While we await more propitious circumstances, the North American idea remains alive.

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Three Cheers for the Commonwealth

Excerpted from ipolitics, March 12, 2012

oday is Commonwealth Day. At the Pearson Building, they will run up the Commonwealth flag, a golden globe set on a blue background. The flag originated from car pennants used at the 1973 Commonwealth Heads of Government meeting in Ottawa.

The 61 spears that form a “C” around the globe on the flag represent not its members but rather the
functional work of the institution – practical, people-oriented and aimed at giving people a hand-up through technical assistance.

It is the Commonwealth’s usually overlooked functional work that deserves our first cheer. Commonwealth-supported initiatives range from setting standards and sharing best practices on everything from life-saving to lawyering. While no longer enjoying preferential arrangements, the idea of giving developing nations preferred access, now a principle of the WTO, began with the imperial preferences.

Sports play a big part in encouraging fellowship. The Commonwealth Games were first hosted in Hamilton by Canada in 1930. Every four years they bring together Commonwealth athletes in what are purposely styled the ‘Friendly Games’.

The second cheer goes to Canada’s continuing contribution.

Born out of the old British Empire, the Commonwealth is arguably the oldest continuous intergovernmental association. That it evolved from Empire to Commonwealth owes much to the initiative of then prime minister Louis St. Laurent and Lester Pearson, then our minister for external affairs.

The challenge in 1948-9 was how to incorporate the new republic of India, the former ‘jewel in the Crown’, into a group that still pledged allegiance to that Crown. Working with Indian prime minister Nehru and others, St. Laurent and Pearson came up with the London Declaration whereby the Crown is recognized as “symbol of the free association of its independent member nations and as such the Head of the Commonwealth”.

The first Secretary General of the Commonweath was Arnold Smith, a distinguished Canadian diplomat and contemporary of Pearson. Appointed in 1965, his ten-year tenure put in place the core political values that culminated in the 1971 Singapore Declaration and the belief that “that our multi-national association can expand human understanding and understanding among nations, assist in the elimination of discrimination based on differences of race, colour or creed.”

Non-discrimination and respect for human rights are fundamental to the Commonwealth ideal. With strong leadership from Canadian prime minister John Diefenbaker, South Africa was shown the door over its apartheid practices in 1961 (then readmitted in 1994 with the end of apartheid).

In the intervening years, Nigeria and Pakistan were also suspended over human rights violations and Zimbabwe and Fiji are currently outside the Commonwealth for the same reason.

Prime Minister Harper has criticized human rights abuses in Sri Lanka and he has served notice that, without progress, he’ll boycott the next Commonwealth Heads of Government meeting (CHOGM), scheduled for Colombo, Sri Lanka in 2013.

The Harper approach is consistent with Canadian leadership since the inception of the modern Commonwealth.

Canadian Senator Hugh Segal is one of the ‘eminent persons’ who are currently leading the reform movement within the Commonwealth. Inspired by the core values of non-discrimination, the Eminent Persons Group presented 106 ‘urgent’ recommendations, at the Perth 2011 CHOGM. They reported that the Commonwealth was in a state of decay and in urgent need of ‘people’ oriented reforms, including a Charter reflecting human rights, democracy and the rule of law.

Leaders agreed to the need for “one clear, powerful statement” but there was no consensus on recommendations that, as well as the proposed Charter, included the repeal of anti-sodomy laws and the creation of a human rights commissioner.

Punted to study groups, Commonwealth foreign ministers will take another look at the reform plan this fall. It’s the kind of difficult file deserving the personal attention of John Baird, who is energetically advancing human rights.

The third ‘hurrah’ goes to the Head of the Commonwealth, Queen Elizabeth. We celebrate her diamond jubilee this year and her reign virtually tracks the evolution of the modern Commonwealth. Behind the CHOGM curtain, her counsel has been described as wise, pragmatic and progressive.

In this year’s annual message for Commonwealth Day, the Queen says we “celebrate an extraordinary cultural tapestry that reflects our many individual and collective identities… however different outward appearances may be, we share a great deal in common.”

The Queen’s message of tolerance and pluralism captures the original spirit of the Commonwealth. It is one to which Canadians, in particular, can relate. Importantly, it should inspire the Commonwealth leaders as they look to the future. The useful institution is not broken but it does need to be fixed.

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Harper visits China

CPAC anchor Peter van Dusen interviews Colin Robertson, vice-president of the Canadian Defence and Foreign Affairs Institute, and discusses the prime minister’s continuing visit to China.

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Canada in the Americas

Excerpted from Americas Quarterly Winter 2012 Diplomacy: Canada’s New Policies Toward Latin America

In August, on his fourth official visit to Latin America, Prime Minister Stephen Harper set out to reboot Canada’s on-and-off-again relationship with the region. In the first stop on a four-country tour that took him to Brazil, Colombia, Costa Rica, and Honduras, Harper declared in São Paulo that “during too long a time we neglected relations[…]too much grass grows in the cracks on the road. It is time,” he added, “for increased ambition.”

Ambition is important. But so is perseverance.

Canadian efforts in the Americas are characterized by quixotic spasms of tango-like embrace: joining the Organization of American States (1990); negotiating the North American Free Trade Agreement (NAFTA, 1993–1994); and committing to the Free Trade Area of the Americas (1994)—all nearly 20 years ago. But this rush of engagement was followed by a long siesta until 2007, when the Harper government announced its Strategy of Engagement in the Americas, which emphasized democratic governance, prosperity and security. The plan is only now taking shape.

It does take two to tango, and Latin American governments share equal responsibility for failing to take advantage of Canadian interest and opportunities.

So what makes Harper’s newest effort different?

First, there is the economic malaise in the United States and the recognition that Canadians really do need options to the U.S. market. Agree or not with Standard & Poor’s’ reevaluation of American creditworthiness, there is no disagreement with its analysis that “the effectiveness, stability and predictability of American policymaking and political institutions have weakened.”

For Canadians, the U.S. market and the bilateral relationship will always remain primordial, but as the U.S. hunkers down and the administration focuses on a “jobs” agenda, there is a likelihood of renewed protectionism—which could affect the huge Canada–U.S. resource trade in everything from lumber to fish. Notwithstanding President Barack Obama’s promise to export his way out of the economic malaise, certain Democrats and Tea Party Republicans equate free trade with the outsourcing of jobs. And that may impede further efforts to broaden the opportunities for Canada under NAFTA.

While Canadian and U.S. negotiators are in discussions to ease border access for people and goods, these steps alone will not strengthen the Canadian market. Canada must look to new opportunities to hedge its bets.

That is being done slowly in Latin America. On August 15, a free-trade agreement (FTA) with Colombia—an economy equal to the state of Connecticut—went into effect, and new implementing legislation for the Canada–Panama Free Trade Agreement (similar in economic weight to Vermont) is being introduced in Parliament this fall. Canada also has FTAs with Costa Rica, Peru and Chile.

Beyond FTAs, Latin American countries are making it easier for Canada to invest and do business in the region. A decade-long dose of the Washington Consensus, whatever its faults, has rinsed away the previous attachment to the Prebisch-inspired statism that stigmatized earlier efforts at boosting investment and terms of trade.

Mexico is a prime example. The World Bank and International Finance Corporation’s Doing Business 2011 report declared this NAFTA partner as the easiest place in Latin America to run a company. The International Monetary Fund says Mexico’s economic growth will eclipse that of the U.S. and Canada from now until 2015, and Goldman Sachs predicts that in 40 years Mexico will be the world’s fifth-largest economy—bigger than Russia, Japan or Germany.

Third, Canadian business is prepared for risk, recognizing that the options are either grow or get absorbed. Twenty years of freer trade have given Canadian companies, especially the larger ones, the confidence that they can compete internationally and the experience of operations on the global stage.

CTV network anchor Andrea Mandel-Campbell notes in Why Mexicans Don’t Drink Molson that Canadian companies are historically timid about venturing into international markets, but Mexicans ride on Bombardier-constructed subways and Scotiabank is the sixth-largest retail bank in Mexico. Where once Canada’s business associations focused almost exclusively on the U.S., their membership is now encouraging them to look beyond its neighbor to the south.

Fourth, the renewed Canadian approach melds trade objectives with development aspirations. Attitudes toward aid are changing with the increasing recognition that a job is the best form of development assistance. A key feature of the rebooted relationship with Brazil is a CEO Forum, staffed by the Canadian Council of Chief Executives and the Brazilian National Confederation of Industry.

This business-to-business dimension promises real gains, especially if Brazilians and Canadians can agree on a set of practical objectives such as increasing direct flights and identifying business impediments that can be addressed by working with governments. CEO forums should be included in every FTA negotiation and built into the existing relationships with Mexico and Chile.

To sustain the opening with Brazil and to move the relationships with key partners like Mexico and Chile to the next level will require a series of focused blueprints. These will have to address critical questions such as how to attract more Latin American investment in Canada and what barriers—especially those specific to Latin America—can be addressed by Canadian initiatives. The Canadian business community is engaged and should be a driving force for taking the relationship to the next level.

In every case, there needs to be a systematic plan of engagement starting at the most senior political level.

For one, the prime minister needs to block at least one week a year for visits to the region. To provide the needed intellectual capital, Canadians also need to actively support the work of think tanks and improve existing synergies among organizations.

The demise for lack of funding in September of the Canadian Foundation for the Americas (FOCAL) research center, after 21 years of advancing Canadian interests, is a setback because it consistently provided useful intellectual heft and intelligent trend-spotting.

FOCAL had been largely dependent on Canadian government funding after it was created by an act of cabinet under Prime Minister Brian Mulroney (1984–1993). In its next iteration it should look more like the Inter-American Dialogue or Americas Society/Council of the Americas, with strong private-sector involvement and a focus on investment and trade as the best means of generating development and creating long-term relationships.

The current Canadian government is not the first to promise a new look at the region, but all too often action never followed rhetoric. If the Americas are truly a priority, and Harper’s promise to be “ambitious” is more than just repetition of the old rhetoric, the prime minister’s continued attention to the region will be necessary.

Unless the Canada–Latin America relationship is given a place of priority on the agenda and moves from aspiration to pragmatic results, the grass will grow back in the cracks.

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