Canada, Mexico and NAFTA

Canada needs to lift visa requirement for Mexicans

Colin Robertson The Globe and Mail Tuesday, Oct. 28 2014

When it comes to statecraft, there is no better place to show the flag than the deck of a warship. This past week, HMCS Athabaskan moored at the Mexican port of Veracruz to help celebrate 70 years of Canada-Mexico diplomatic relations and 20 years of economic integration through NAFTA.

Canadians love Mexico – close to two million of us will visit this year making it our most popular foreign destination after the United States.

We do not reciprocate the Mexican welcome mat.

A visa requirement – imposed pre-emptively in the summer of 2009 after a surge in Mexican refugee claimants – remains in place. The Mexicans have since cracked down on the nefarious operators at their end, while the Harper government reformed our once-lax refugee system.

Lifting our visa requirement, or at least identifying a path to resolution, continues to be Mexico’s main “ask” of Canada.

For the Mexicans, the lack of progress on the visa situation is frustrating and poisons the relationship. It sticks in their craw the same way that the Obama administration’s rag-the-puck approach on the Keystone XL permit frustrates us.

Potential insult on injury lies ahead if Mexico is not included in the electronic travel authorization system that the Harper government will roll out in the coming months.

We need to find a way to include Mexico or to have a specific road map, resolving the visa issue, before the next North American Leaders’ summit, scheduled for Canada in the early spring.

Beyond its effect on official relations, the visa situation deters Mexicans from visiting, studying and doing business in Canada.

In 2008, the year before the visa requirement, Mexicans were our sixth source country for tourism, spending an estimated $364-million. They have since fallen to tenth place and their spending has halved. Mexican investment in Canada ($22-million) is dwarfed by Canadian investment in Mexico ($12-billion).

This hassle over getting to Canada is the biggest deterrent and led to the cancellation earlier this year of a buying mission to have been led by Mexican President Enrique Pena Nieto. With the passage of its energy reforms opening doors to foreign investment and partnership, Mexico is actively looking for the kind of energy and engineering skills that Canada has developed.

The provinces get it and they are taking the initiative to work with Mexican states and its national government. In June, Alberta’s Energy Regulator signed an agreement to work collaboratively on best practices in hydrocarbon development with its Mexican counterpart

The conditions for North American integration have never been better even if the personal chemistry between the three leaders – Stephen Harper, Enrique Pena Nieto and Barack Obama – is such that their meetings do not require air conditioning.

Commerce has expanded significantly since NAFTA took effect 20 years ago. The goal over the next decade should be to double the current trillion dollars plus in annual continental trade.

It’s doable if we can get our act together. Together, we have a market of 500 million with the resources, thanks to technology, to fuel a new manufacturing revolution revitalizing North America’s industrial base.

Later this week, the three trade ministers – Canada’s Ed Fast, Mexico’s Ildefonso Guajardo and Penny Pritzker of the U.S. – meet in Toronto. Their meetings with the business community and beyond are designed to advance North American competitiveness discussions, begun last October in San Diego, from “vision to action.”

They should start by looking at North American auto production. Last week’s decision by Ford to site their new engine production plant in Mexico rather than Windsor is a reminder that supply-chain dynamics have long outpaced the 50-year-old Canada-U.S. Auto Pact.

The ministers should prioritize developing a North American Auto Pact and position the countries, not as competitors, but collaborators in regional and bilateral trade deals.

It is estimated that 25 per cent of the content of goods Canada exports to the United States originated in the U.S. For Mexican exports to the United States, the U.S.-originated content is 40 per cent (contrasted with China, Brazil and India at 4 per cent, 3 per cent and 2 per cent respectively).

A beggar-thy-neighbour approach will only diminish our collective economies. We have evolved from the classic trade in goods to making things together.

All three nations have a vested interest to ensure that there is convergence in the rules-of-origin in the new trading pacts in which we are involved together – like the Trans-Pacific Partnership or independently.

NAFTA worked. It’s now time to move forward with a new regime that acknowledges the realities of North American economic integration and the benefits of “Made in North America.”

Sanctions and Mr. Putin

How Harper can get at Putin, and other tips on sanctions

Colin Robertson The Globe and Mail Tuesday, Aug. 05 2014

Sanctions started with the travel and banking blacklist of Vladimir Putin’s closest cronies – the new nomenklatura. After the annexation of Crimea, bans were put on arms sales and the export of energy-related technology.

Last week, Western capital markets closed to Russian state banks. Western governments also expanded the list of Russian banking, arms and energy companies banned from doing business in the West.

Will these new sanctions work?

In the short term probably not as Russians are behind their President. Recent Russian polls put Mr. Putin’s popularity at over 80 per cent with strong confidence in the direction of the country, their military and government.

At the World Trade Organization, the Russians say the sanctions could trigger a fight that would “ultimately undermine the credibility of the multilateral trading system.” It will test the national security override provision in the WTO.

Outside of the G7 and the European Union, only a few nations are applying serious sanctions to Russia. There are still loopholes for Russia to avoid or evade them.

Sanctions are only as strong as the weakest link.

The Western arms ban only applies to transactions after the Crimean invasion. France intends to sell two warships – Sevastopol (as in occupied Crimea) and Vladivostok – to Russia. As the New York Times editorialized, “financial sacrifice is one thing; arming Russia is another.”

If Prime Minister Stephen Harper wants to cock a snook at Mr. Putin, do a favour to French President François Hollande. Pre-emptively purchase the ships for the Royal Canadian Navy. Rename them Frontenac and Champlain, after our great French warrior-governor explorers. Sign the Canada-Europe trade agreement on their deck.

For sanctions to bite they need to be progressively ratcheted up. The rest of the world needs to buy in. Sanctions work better when targeted, calibrated and comprehensively applied.

As with armed force, threat of sanctions has deterrent value. As with force, their application record is mixed.

The challenge, pointed out Jimmy Carter in his Nobel lecture, is avoiding the “injustice” of sanctions, aimed at penalizing abusive leaders, that “inflict punishment on those who are already suffering from the abuse.”

Sanctioned nations – Rhodesia after its Unilateral Declaration of Independence, South Africa over apartheid, Cuba since Fidel Castro, China after Tiananmen Square, Iraq after the first Gulf War and currently North Korea and Iran – have proven resilient. They adapt and find alternate sources through the black market or other rogue regimes.

In Economic Sanctions Reconsidered, Peterson Institute scholars’ Gary Hufbauer and Jeff Schott look at the effect of sanctions since the First World War.

Sanctions were assessed “at least partially successful” in one-third of the 204 cases examined.

Used to punish and deter, as well as to assuage domestic constituencies, they were more effective when applied between friendly nations, likely because they shared norms of behaviour.

Financial sanctions are becoming increasingly effective through better tracking. Named companies and individuals become “radioactive,” curbing their ability to travel and profit.

In their look at three decades of sanctions on Iran, the Iran Project concluded their impact on the kitchen table helped persuade Iran to return to the nuclear bargaining table. The challenge is knowing when to convert a “purely confrontational strategy” to one combining pressure and positive signals.

Sanctions are having an effect on Russia. Russia’s central bank raised its interest rate to 8 per cent last week noting the “negative impact” of “external political uncertainty.” Russian annual growth was downgraded by the IMF to 0.2 per cent.

Western leaders need to pressure the new beneficiaries of the liberal international order, especially those in the G20, to join in the application of meaningful sanctions. With global trade and investment rights come community responsibilities.

Within the G7, set a timetable for additional sanctions if President Putin does not comply.

For Mr. Putin to get away with invasion, annexation and the murder of innocents is wrong. Hold him to account.

Sanctions are imperfect but a better tool than using force. “Peace” Ronald Reagan observed, “is not absence of conflict, it is the ability to handle conflict by peaceful means.” Hitting the bad guys in their passports and pocketbooks helps encourage compliance.

Sanctions oblige patience, fortitude and disciplined unity – difficult virtues for democracies. But at stake is the integrity of our liberal international order.

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Lessons of Keystone: Lift Canada’s Game in the USA

Rather than get even, Canada needs to get smart on Keystone

The Globe and Mail Tuesday April 29 2014 and Real Clear World April 29, 2014 and BBC What in the world? Pieces of global opinion April 30, 2014

Disappointment, frustration, even anger, are natural reactions to the Obama Administration’s Good Friday decision to delay, again, permitting the Keystone XL pipeline.

It belittles the Administration’s promise of fair and timely process. It’s a rebuke to a loyal ally who is also America’s biggest customer.

Extending the process for more review, even with the Nebraska challenge, rings hollow especially, as TransCanada’s Russ Girling observed, “after more than 2,000 days, five exhaustive environmental reviews and over 17,000 pages of scientific data.”

The more likely reason: the White House calculation about the midterms and the contribution in money and campaign enthusiasm of the environmental movement.

There will be a Canadian temptation to ‘get even.’ Resist it.

The United States accounts for 70 per cent of our trade and more than one third of our economic output.

Even without Keystone, oil is getting to U.S. refineries through existing pipelines and, increasingly, by rail and truck. That pipelines are the safer means of transport is acknowledged in the State Department’s environmental assessment.

Rather than get mad, we need to be smart.

The Obama Administration likely will rag the puck on the permit until after the November elections. Meanwhile, our allies in Congress will continue to push. Most Americans favour the pipeline.

At home, we need to turn our energies to constructing east-west pipelines and terminals so we can get our oil and gas to tidewater.

With U.S. energy production rising, some Americans believe Canadian energy is unnecessary. They are wrong.

The U.S. imports 8-9 million barrels of petroleum daily; one-third from Canada. American reliance on Canadian oil is increasing (in January we supplied more than OPEC). But we need to get it there.

We also pay the penalty inflicted on a captive supplier to a sole market. Dependence on the U.S. market could result in the ‘managed trade’ situation endured on softwood lumber until we opened an alternate market with Asia.

Unlike most presidents, Barack Obama seems not to appreciate the strategic importance to the U.S. of Canada.

Since Franklin Roosevelt and Mackenzie King parleyed at Kingston in 1938, the dynamic of Canada-U.S. relations has revolved around our security and economic partnership.

The U.S. wants a reliable security partner.

We upped our game on security after September 11. We spent billions creating a security perimeter. Our collective security credentials are demonstrated in Afghanistan, Libya and now in the Ukrainian crisis.

In return, we expect a reliable economic partner.

Prime Minister Harper’s border access initiative has made progress but it lacks the sustained senior-level U.S. commitment demonstrated during the ‘Smart Border’ process.

As a teachable moment, Keystone recalls the Carter Administration’s failure to ratify the East Coast Fisheries Agreement in 1978.

The lesson then was the necessity to engage Congress directly.

Under Ambassador Allan Gotlieb, we took our case directly to Capitol Hill and into the districts. We would no longer rely on a feckless Administration.

Not traditional diplomacy, it still advances our interests in Washington.

The conditions for ‘getting it done’ in Washington have ‘evolved’ again.

Politics are polarized making it harder to find compromise. Messaging through social media is instant and driven from every point. The rise of big money, supported by two Supreme Court decisions, increases the power of special interests to the detriment of deliberative, consensus-driven public policy.

We need to recalibrate our game.

For corporations, the lesson is that social engagement – explaining projects to the community – is here to stay.

For government, strengthen our outreach effort to complement the work of Ambassador Gary Doer and our diplomats. Every minister travelling to Washington should call on Congress.

Encourage more congressional outreach by MPs like Rob Merrfield. In June, the interparliamentary caucus , re-energized by co-chairs Janis Johnson and Gord Brown, host their U.S. counterparts in Ottawa. The Halifax International Security Forum agenda always has a place for U.S. senators.

Second, get to know the potential 2016 candidates and their staff so they know more about Canada.

We also need to know more about the United States. It’s time for a serious parliamentary study; the last comprehensive report was in 1978.

Third, engage more at the state level – targeting state legislators and, especially governors.

In 2010, the premiers met the governors to smooth the path to procurement reciprocity. Why not another meeting around the logistics of continental supply chains? Or carbon pricing? Or fracking standards?

Cutting our consulates was a mistake. Aim for a presence in every state for the 2016 presidential election.

Keystone is delayed, not doomed. Learn from this episode. Lift our game in the United States.

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

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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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