Plan would give U.S. a say on our energy

Canadian officials propose expansion of continental ties

Toronto Star - January 9, 2003
by Graham Fraser, National Affairs Writer

Canada could give up the ability to regulate its energy resources if a sweeping proposal being discussed by Foreign Affairs and International Trade officials is accepted.

The officials are developing a proposal to broaden and extend the U.S.-Canada border accord to a far-reaching continental approach to the North American economy that could eliminate Canadian regulation of its energy resources. They are proposing that Canada, the United States and Mexico should "examine and address (the) regulatory environment for trade in oil, gas and electricity to eliminate all impediments to North American energy security."

If implemented, the proposal would create a common North American approach to standards, testing, qualifications, regulations, labelling, procurement and environmental protection.

This could have an impact on areas as varied as Canadian health inspections and regulations, training of pilots, truck drivers and ship captains, consumer protection, bilingual labelling requirements, independent environmental standards, regulation of Canadian energy resources and provincial control of electricity.

According to a two-page internal memo obtained by the Star, entitled "Securing Growth: Beyond The Border Accord," these changes would have the effect of reducing costs, improving productivity and enhance prospects for growth, and "free up more resources that could be devoted to our shared security interests."

The proposal is clearly at only the internal discussion stage among officials, and has not reached the point of being considered by ministers.

The memo lays out an unprecedented leap toward an even more continental approach to the economy than the 1988 Free Trade Agreement that would further limit the ability of national and provincial governments to intervene. The memo argues that Canada and the U.S. now have "a unique opportunity" to include Mexico and expand the North American Free Trade Agreement and the Canada-U.S. border accord.

On Dec. 12, 2001, John Manley, then minister responsible for security, signed a 30-point Smart Border Declaration with U.S. Homeland Security director Tom Ridge.

The "Securing Growth" memo says "the tragic events of Sept. 11, 2001" risked undermining the North American market, but the Smart Border Declaration succeeded in increasing border security and making it easier for legitimate trade to continue.

The memo stresses that business leaders in Canada and the U.S. have been urging the two governments to do more.

"Such an initiative is increasingly enjoying analytical support," the memo states, pointing to a study done by the C.D. Howe Institute and other reports. "And the costs of not doing so are immense."

The memo illustrates what could be pursued under the auspices of NAFTA and "the Partnership for Prosperity" process (a U.S.-Mexico agreement signed last year intended to channel U.S. private sector investment to specific regions of Mexico where unemployment is high) "that would reduce costs, improve productivity, and enhance prospects for growth ... free up more resources that could be devoted to our shared security concerns."

Under the category "Secure Flow of Goods," priorities are to:

• "Identify standards, inspection/approval procedures, labelling and related requirements to be made compatible with view to applying the principle of `tested once, acceptable in North America' (e.g., pharmaceuticals, industrial goods, consumer goods).

• "Review rules of origin requirements, including documentation, to reduce transactional costs; move to MFN-free (most favoured nation) wherever possible.

• "Examine and address regulatory environment for trade in oil, gas and electricity to eliminate all impediments to North American energy security.

• "Agree on common approaches to exemptions from WTO (World Trade Organization) safeguards actions."

Under the category "Secure Flow of People," the memo calls for:

• "Building on NEXUS (the pilot project for quick border crossings for business purposes), improve framework for temporary business entry in a way that facilitates executive and professional mobility.

• "Expedit(ing) a work program to ensure a secure and efficient transportation sector (e.g. pilots, drivers, ships' captains)."

Under the category "Secure Infrastructure," the memo suggests Canada, the U.S. and Mexico should:

• "Review electronic commerce, architecture and `backbone' with a view to protecting the integrity of telecoms and computer networks.

• "Expedite a review of energy infrastructure, including pipeline capacity, electricity reliability and transmission.

• "Building on existing Canada-U.S. co-operation against telemarketing fraud, pursue opportunities to ensure a common regulatory environment for electronic commerce, including cross-border consumer protection.

• "Expand opportunities for non-discriminatory procurement, particularly for small- and medium-sized business.

• "Expedite review of International Joint Commission and related work programs with a view to preserving the integrity of our shared environment, with emphasis on clean air, clean water, toxics and hazardous waste.

• "Establish a process or mechanism for long-term binational border planning."

The memo emerges at a time when Canada-U.S. relations are at a particularly tricky point.

Prime Minister Jean Chrétien has taken pains to keep his distance from U.S. preparations for a war against Iraq.

The softwood lumber dispute is unsolved, the Bush administration has been pressuring Ottawa to increase military expenditures, and the FBI admitted they were wrong when they claimed five men had entered the United States illegally from Canada. The admission prompted federal Immigration Minister Denis Coderre to call for an apology.

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