Easing flow of goods doesn’t have to raise security risks
More than two decades ago, Canada went through a wrenching national debate on the prospect of free trade with the United States. The 1988 election was a plebiscite on that single issue in a way that few elections have been in our history. The result, of course, is well known. Since its inception, the North American Free Trade Agreement (NAFTA) has played a huge role in increasing two-way trade between the U.S. and Canada to more than $1.5 billion per day.
Sadly, in the wake of the recent joint announcement on security and trade integration with the U.S., many of the same arguments trotted out in 1988 in opposition to NAFTA are resurfacing. Those relying on the scare tactic that Canada is set to become the 51st star on the American flag are repeating the same errors of history.
No cause for concern
If the NAFTA debate of the 1980s and the subsequent boom in trade have taught us anything, it’s that economic integration does not equal cultural suffocation or compromised sovereignty. If anything, Canadians have worked to increase the cultural distinction between ourselves and our American neighbours during the past two decades as trade has boomed.
While trade has indeed flourished, serious challenges remain. Particularly since September 11, 2001, many firms operating on both sides of the border have seen increased congestion, regulatory hurdles and general obstructionism when trying to do business between the U.S. and Canada. Security is paramount and a country’s border is its last line of defence. But an effective border is one that must allow trade to flow freely while at the same time acting as a rock-solid line of defense for both sides. These demands are not mutually exclusive.
Integrated market
In the automotive industry, the integration of production along continental lines has been vital to the quick emergence from the recession of 2008 and 2009. However, dealing with border issues has become more difficult, not less, in recent years. In 2005, automotive exports to the U.S. from Canada were worth $82.7 billion dollars. By 2009 that number had dropped to just over $40 billion, a more than 50-percent decline. Similarly, imports in the industry declined from $60.8 billion to $38.6 billion over the same time period.
Certainly, much of this decline has come as a result of the recession and the near-death experience endured by much of the industry in recent years. But a large piece of the pie has been due to a reduction in the effectiveness of our border relationship with the United States, far and away our most important trading partner. What brought the economy to recession can’t be quickly cured, as we are learning right now. But an effective border is a goal that can be reached with the sort of cooperation recently demonstrated by the two countries’ leaders.
Regulatory harmony
The recent announcement is to be celebrated. Businesses of all kinds in Canada face huge compliance burdens when shipping goods across the Canada-U.S. border. This threatens competitiveness and compromises employment on both sides. At a time when both countries – particularly the United States – are struggling with low employment, needless red tape at the border is an undeniable job killer that can be done away with permanently with a little vigilance from both sides.
CADA has long advocated for regulatory harmony with the U.S. in an effort to ease compliance burdens. This does not mean we are in favour of ceding sovereignty to the Americans. Simply, one does not follow the other. History has taught us that working together to secure a trade-friendly border is not one and the same with ceding the prerogatives of Canadian sovereignty.
