the new petro power paradigm - Diplomat Magazine

DIPLOMATICA|CanadA-U.S. Relations
burdensome border administration. It is
at the border that compliance is monitored
most meticulously, adding to time and
cost.
As Kathleen MacMillan 2 has written,
“regulatory incompatibility means reduced
trade, higher compliance costs for
business, extra expenses for consumers
and less than optimal outcomes… that
damage our competitiveness unnecessarily.”
She added, more pointedly, that Canadians
are simply “shooting themselves
in the foot” by maintaining and even
expanding minor but wasteful regulatory
differences.
The differences are particularly damaging
for smaller companies, and because
Canadian companies tend to be smaller,
the burden on Canada is lopsided. The examples
of inconsistency are legion, reflecting
what Prof. Hart 3 has characterized as
the “tyranny” or the “narcissism of small
differences” — the obsession for maintaining
difference to sustain distinction:
• In Canada, anti-theft immobilizers
are required on all vehicles; in the U.S.,
lower-cost entry-level vehicles are exempt.
This is just one of more than two dozen
different standards undermining efficient
production by North American auto companies;
• In Canada, cheese-flavoured popcorn,
which is imported, must contain no
more than 49 percent real cheese — perhaps
with a nod to Canadian dairy farmers
— whereas, in the U.S., no less than 53
percent;
• In Canada, fortified orange juice is
classified as a “drug.” In the U.S. it is classified
as “food;”
• Because of different labeling requirements
and despite our colder weather,
Canadians pay more for body deodorants
than Americans;
• There are differences over the colouring
and nutritional content of jellybeans, a
distinction that David Ganong once highlighted
at the top level of the two governments,
to no avail.
That is why a more balanced approach
to trade and security makes sense. On
security, the objective fundamentally is
to enable both countries to cooperate
better using 21st-Century technologies,
measures and techniques to identify and
monitor more closely those posing a real
risk to the security of the U.S. and Canada
(as opposed to those who pose no risk
whatsoever). New challenges from cyberspace
are best countered, as well, by joint
surveillance mechanisms.
To ease border congestion, bi-national
port of entry committees will be established
to coordinate planning and funding
for building and updating shared border
facilities. (Most of the current infrastructure
was established in the first half of the
last century.) The two leaders also pledged
to focus investments in modern infrastructure
and technology at our busiest ports
The potential
benefits to both
countries from the
perimeter security
and regulatory
reform initiatives
are obvious but may
not be sufficient to
drive success. Deeplyheld
attitudes on
security will not be
easy to change.
of entry. Should the new Windsor-Detroit
bridge ever become a reality, it could serve
as a pilot project to move this cooperation
one step further, establishing a single,
bi-national facility for customs and immigration
inspection and epitomizing a bold
new standard of trust and efficiency.
The forces of globalization oblige countries
like Canada and the U.S. to examine
all possible ways to bolster the competitiveness
of our firms, to streamline regulatory
barriers and to expedite trade flows.
It is relevant to note that what we decide
to do better together can also enhance our
ability to take advantage of growth opportunities
elsewhere.
On regulatory reform, the fundamental
objective will be to achieve greater
compatibility and complementarity of
regulatory standards, not harmonization.
The essential ingredient for success will
be an enlightened approach to mutual recognition.
Differences should be confined
to those that serve distinct, identifiable
and transparent public policy purposes
and not the “iron rice bowl” mindsets of
bureaucrats. Either country can pick and
choose where it makes sense to align or
refine common standards. Similarly, each
can choose to leave some topics off the
table. That is the nature of any negotiation.
But the current system would benefit
from a firm shake up and a heavy dose of
common sense.
Because many of the regulations and
standards involved are provincial in nature,
it will be imperative to include the
provinces in negotiations, directly and
substantively. It would be prudent for
the negotiators to be guided by a formal
consultative network of those with a direct
stake in the outcome, including public interest
advocates and experts in regulatory
matters. Privacy concerns about sharing
personal information will also have to be
addressed in a manner consistent with
existing laws and regulations in both
countries.
For too long, the U.S. has seemed to
prefer to deal with Canada primarily
through trilateral summits despite the
fact that this approach generated a meagre
track record in terms of achievement.
Besides, Mexico is not a party to NORAD,
nor to NATO. Nor is it a shared partner in
the Arctic. Especially on matters of security,
these distinctions are acute. Nonetheless,
giving greater attention to bilateral
border and regulatory issues does not
preclude the prospect of doing something
trilateral if and when it makes sense. After
all, NAFTA began as a bilateral agreement
between Canada and the U.S.
The potential benefits to both countries
from the perimeter security and regulatory
reform initiatives are obvious but
may not be sufficient to drive success.
Deeply-held attitudes on security will not
be easy to change. Even more troubling is
the fact that the U.S. is beset by seemingly
intractable challenges at home and abroad
— an unsustainable fiscal problem, a sputtering
economy and the wear and tear of
three protracted and frustrating wars. A
bilateral initiative with Canada, no matter
how promising, will have difficulty
capturing the necessary political support.
For Canada, there is always concern
about a perceived loss of sovereignty in
any bilateral negotiation with the U.S.
That sentiment will never fade away even
though history has demonstrated that
bilateral accords with the U.S. on trade,
defence and the environment have, in fact,
been assertions of sovereignty serving to
strengthen our prosperity, our security
and our well-being as a society.
32 FALL 2011 | OCT-NOV-DEC