Time for NAFTA-plus

With a new U.S. president after 2016, North America can renew itself and thrive

North America is poised to be the most dynamic economy in the next two decades

It is about time. A significant candidate looking to become the U.S. President after 2016 is talking about Canada. Jeb Bush’s comment on the need to better the Canadian-U.S. relationship is on the mark. Far too many conflicts have arisen that should be addressed with a new agreement — call it NAFTA plus — that would make North America a stronger and more competitive region.

Canadian-U.S. relations have hit rock bottom in recent years despite strong ties. Keystone XL is especially difficult to understand since President Obama’s rather bizarre decision to repeatedly delay the pipeline project is burgeoning rail delivery of bitumen to the U.S. Gulf Coast, as much as Keystone would have transported. Rail is not only more expensive, reducing the income gains to Canadian and U.S. Midwest producers, but also less safe and environmentally responsible.

Meat labelling has also undermined North American integration in agriculture, since Canadian and Mexican meat would need to be marked according to country of origin. This has cost the Canadian producers $1 billion per year with some companies like Tyson no longer buying Canadian meat. U.S. meat packers have objected to U.S. legislation since it has made their products more costly to produce. With the WTO decision ruling that the U.S. meat labelling law violates free trade, Canada and Mexico are free to retaliate with tariffs on other products. None of this is good for any country.

And then there are Buy America policies that limit infrastructure procurement to U.S. suppliers at the peril of both Canadian and Mexican producers. The most irritating aspect is the proposed use of Buy America to procurement on the U.S. side of the new Windsor border crossing, whose cost is covered by Canadian funds.

And Canada should take some blame too. Our supply management policies have restricted imports of milk, poultry and egg products, unfairly gouging Canadian consumers in favour of a limited number of large farm producers. Our provinces and municipalities have pro- curement policies that also favour Canadian producers. We also need to resolve visa issues with Mexico that has made it difficult for Mexicans to visit or temporarily work here. With the Canada-U.S. softwood lumber agreement up for renewal in the fall, both Canada and the U.S. could move away from protective policies for its producers.

The Trans-Pacific Partnership involv- ing Canada and the United States with other Pacific countries is one opportunity to help reduce these economic impediments. We will see whether this negotiation will conclude but many trade irritants may still need to be addressed, even if its succeeds.

North America is poised to be the most dynamic economy in the next two decades. It will be a net exporter of oil and gas, a leader in the adoption of new technologies and provider of the best-educated workforce in the world. Instead of letting trade irritants get in our way, we should be look- ing to update our outdated NAFTA agreement to increase trade among the three Amigos. The strengthened North American region will i mprove its ge o - political stance as Asia continues to develop.

Perhaps , this is what Jeb Bush is recognizing. A stronger Canadian-U.S. relationship will help both countries improve their economies as well as maintain North American political power. After all, a strong North American economy also can afford to strengthen relationships with other countries outside the continent.

I can see some important negotiations evolving to improve our economic relationship with the United States and Mexico. All three countries can encourage investment and trade in energy. With a more cost-efficient energy sector, all three can reap economic benefits by exporting to the rest of the world. At the same time, the three countries can develop a North American response to the climate change challenge with harmonized and effective carbon-reducing policies.

All three countries could reduce discriminatory practices that increase the cost of procurement. A seamless North American cost-efficient transportation infrastructure increases opportunities for greater trade with the rest of the world.

Policies that remove agriculture and forest industry protectionism would also contribute to a more dynamic resource sector that could export products to the rest of the world. One need only to look at Australia and New Zealand to see how free trade has made a stronger farm sector that exports far more dairy products than our Canadian producers.

The movement of professionals and trades across borders to work in each country can be facilitated by a deepening of Nexus and visa programs that enable people to migrate or work temporarily in each country without undermining security.

I am sure the above list for a new NAFTA-plus agreement is just a start to a longer one. Jeb Bush is opening a door that Canadian politicians and private leaders should pursue by pushing for trade discussions after 2016.