Public Intelligence

As part of the Security and Prosperity Partnership, (left to right) The Hon. Maxime Bernier, Canadian Minister of Industry; the Hon. Stockwell Day, Canadian Minister of Public Safety; Condoleezza Rice, United States Secretary of State; and the Hon. Peter MacKay, Canadian Minister of Foreign Affairs met in Ottawa on Friday, February 23, 2007.

Leaked U.S. cable lays out North American ‘integration’ strategy (National Post):

The integration of North America’s economies would best be achieved through an “incremental” approach, according to a leaked U.S. diplomatic cable.

The cable, released through the WikiLeaks website and apparently written Jan. 28, 2005, discusses some of the obstacles surrounding the merger of the economies of Canada, the United States and Mexico in a fashion similar to the European Union.

“An incremental and pragmatic package of tasks for a new North American Initiative (NAI) will likely gain the most support among Canadian policymakers,” the document said. “The economic payoff of the prospective North American initiative … is available, but its size and timing are unpredictable, so it should not be oversold.”

Many different areas of a possible integration are discussed throughout the cable, but the focus is on improving the economic welfare of the continent. It suggests one of the main benefits to Canada would be easier access across the U.S. border, calling it a “top motive” for this country.

The cable states Canada and the U.S. already share perimeter security “to some degree,” the question is then how “strong” the two countries want to make that bond.

Discussions are currently underway about increasing co-operation between the two countries when it comes to perimeter security. A broad-based document was released by Prime Minister Stephen Harper and U.S. President Barack Obama in February of this year, laying the groundwork for a deal that would see improved intelligence communication for security concerns and trade.

The details are currently being hashed out by officials from both countries. The proposed deal aims to improve the flow of cross-border traffic and increase security against terrorist threats.

(U//FOUO) SUBJECT: PLACING A NEW NORTH AMERICAN INITIATIVE IN ITS ECONOMIC POLICY CONTEXT (Wikileaks):

(SBU) An incremental and pragmatic package of tasks for a new North American Initiative (NAI) will likely gain the most support among Canadian policymakers. Our research leads us to conclude that such a package should tackle both “security” and “prosperity” goals. This fits the recommendations of Canadian economists who have assessed the options for continental integration. While in principle many of them support more ambitious integration goals, like a customs union/single market and/or single currency, most believe the incremental approach is most appropriate at this time, and all agree that it helps pave the way to these goals if and when North Americans choose to pursue them

…

NORTH AMERICAN INTEGRATION: WHAT WE KNOW
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5. (SBU) Past integration (not just NAFTA but also many bilateral and unilateral steps) has increased trade, economic growth, and productivity. Studies suggest that border efficiency and transportation improvements (such as the lower cost and increased use of air freight) have been a huge part of this picture. Indeed, they may have been more important to our growing prosperity over the past decade than NAFTA’s tariff reductions. Freight and passenger aviation are critically important to our continent’s competitiveness, and businesses are very sensitive to the timing, security, and reliability of deliveries – hence the “border risk” which so concerns Canadian policymakers.

6. (SBU) A stronger continental “security perimeter” can strengthen economic performance, mainly by improving efficiency at land borders and airports. It could also facilitate future steps toward trilateral economic integration, such as a common external tariff or a customs union, if and when our three countries chose to pursue them. Paradoxically, the security and law enforcement aspects of the envisioned initiative could hold as much – or more – potential for broad economic benefits than the economic dimension.

WHERE’S THE UPSIDE?
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7. (SBU) Some international economic initiatives (such as FTAs) produce across-the-board measures that generate broad benefits for a country’s industries and consumers on a known time-line. This was true of NAFTA but it is less likely to be true of the economic aspects of the NAI. Non-tariff barriers such as standards and regulations generally must be tackled one-by-one. This is a piecemeal process and the ratio of payoff to effort is likely to be lower than with across-the-board measures. Governments naturally focus on resolving the problems which their firms or citizens bring to their attention. While this approach has merits, it tends to deliver the payoffs toward particular interests. If there are hidden costs, there might be little impact on national performance. As we move toward a list of barriers to tackle, it will remain important to balance those interests. For example, some Canadian economists have suggested that NAFTA fell short of expectations with respect to increasing consumer choice in Canada; that may be a theme we should stress as efforts to promote further integration take shape.

8. (SBU) In contrast, cooperative measures on the “security” side, a critical focus of current bilateral efforts, can deliver substantial, early, and widespread economic benefits. Security and law enforcement within North America have evolved rapidly since 9/11, leading to many less-than-perfect processes for handling legitimate international traffic. Collaboration to improve these processes could yield efficiency improvements which would automatically be spread widely across the economy, leading to general gains in trade, productivity, and incomes.

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