It may sound counter-intuitive but a Democratic president could provide Canada with the just opening it needs to drag its trade relationship with United States into the 21st century -- assuming the Harper government has brains and the courage to capitalize on it.
It is true neither Hillary Clinton
nor Barack Obama
are free-traders.
Mr. Obama wants to tack labour agreements on to NAFTA, while Ms. Clinton wants "smart trade" that advances labour rights and the environment. Both are playing to populist fear the trade costs jobs.
Still, by the time a Democratic president gets through dealing with Iraq and health care by 2010 or so, his or her attention will inevitably return to the world stage, argues Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics in Washington.
Canada could provide the United States with a good news story on trade it needs, Mr. Hufbauer says. U.S. fears over product safety and environmental concerns are much less with Canada, than say China.
"That's the opening," Mr. Hufbauer said at a panel discussion on trade issues in Toronto on Friday.
Michael Hart, a trade expert at the Norman Paterson School of International Affairs at Carleton University, agrees the timing could be right to present Washington with the "big idea" it can run with.
"Washington is not a city that works well with tiny, little issues," says Mr. Hart, who as a former official at the Department of Foreign Affairs, was key advisor on NAFTA, FTA and GATT.
"Only the big ideas grasp its attention."
That a big idea on Canada-U.S. trade is needed there is little doubt.
While Canada fiddles around pursuing meaningless free-trade agreements with countries such as Colombia and Peru -- the multi-zillion-dollar market for pulses in Colombia is apparently up for grabs -- it has let its trade relationship with its most important partner stagnate since NAFTA was signed 14 years ago.
"We reached the high point in the year 2000 in volume in terms of trucks and human traffic," Mr. Hart says.
While security concerns since Sept. 11, 2001, have led to a thickening of the border between Canada and the United States, raising costs and creating delays for both goods and people, the main problem is neither country has accepted it needs to move beyond "trade policy" toward a new "integration policy," the experts argue.
From a common security perimeter to common regulation, it is time Canada-U.S. trade grew up. As Europe embraces the concept of mutual recognition of regulations and Asia speeds toward freer trade, the biggest trading relationship in the world is increasingly bogged down.
"Canada and the United States don't really trade with each other any more; they build things together," Mr. Hart says.
The point really hit home during the BSE crisis, Mr. Hart says. A calf may be born in Alberta, but it is sent to Montana to eat grass, back to an Alberta feedlot to get fattened up and on to Chicago to get butchered. That is why tracing the infected meat was so important.
That is also why one North American food standard would make sense.
Mr. Hufbauer argues Canada would benefit from simply adopting large swathes of U.S. regulation.
Mr. Hart points out as the gold standard in drug regulation, U.S. Food and Drug Administration employs 10,000 people and spend billions of dollars vetting drugs. Yet Canada feels it has to employ another 985 people to second-guess the FDA. The result? Drug approval can take years longer, denying Canadians potentially life-saving drugs.
He adds two-thirds of Canadian regulatory standards are not as tough as U.S. standards and carry far lower liability costs. Mr. Hufbauer says common Canadian and U.S. standards could cover at least 90% of the trade in food products.
"After all, 30 million Canadians and Americans eat in the other country during their annual travels," he says.
A new trade integration campaign is badly needed. "This needs political momentum, this needs political leadership, this needs to be put of the top of the Canada-U.S. agenda," Mr. Hart says.
One wonders if Canada-U.S. trade is even on the Conservatives' agenda.National Post's Financial Post & FP Investing
