The Canada/U.S. relationship is unique in the world due to proximity, shared values, mutually beneficial economic ties and common ground, literally and figuratively.
The Canadian American Business Council was founded in 1987, amid a fierce debate on free trade between Canada and the United States, a year before the North American Free Trade Agreement became a central argument in Canada's 1988 federal election campaign. The CABC has been a staunch advocate for free trade and deepening the strong historical ties between Canada and the United States ever since.
In 2018, the fate of the NAFTA has become an animating dynamic between the countries of North America and within the U.S. states, Congress and Trump Administration. CABC advocates for the modernization of NAFTA and serves to highlight the other areas of Canada/U.S. collaboration that continue to make our bilateral relationship a model for the world.
Now in our thirty-first year, the CABC stands for four core principles:
* Common Ground (ecosystems and border)
* Shared Prosperity (trade and regulatory cohesion)
* Shared Security (intelligence sharing and joint defense)
* Forward Leaning (innovation, modernization)
Here is how we define each of our core principles:
Because about 400,000 people and an average of US$1.7 billion cross the Canada-U.S. border daily, the efficiency of our bridges and border crossings is critical to the livelihoods of millions of Canadians and Americans, not to mention integral to the unhindered flow of goods and services for all North American sectors. CABC has advocated for many years to expand customs preclearance beyond the handful of passenger clearance at airports in Canada into cargo clearance as well as other modes of border crossing including maritime and rail. We will continue to work with governments and industry on the implementation of the long-awaited pre-clearance expansion. We will also focus on ways to improve the efficiency of border crossing for goods and people.
The 49th parallel separating our two countries cannot divide the ecosystems we share. CABC works to ensure our shared continental ecosystem is protected via bilateral agreements on acid-rain emissions, air quality, joint watershed and waterway management, and the sustainable development of resources.
I. Modernize NAFTA. If modernization proves too difficult in the short term, preserve the predictability of the status quo until a new agreement is agreed. Examples of ways to modernize NAFTA, including suggestions for a digital and pharmaceutical chapter of NAFTA can be found in the appendix.
II. Enhance Regulatory Cooperation. Since the fur trade, the economies of modern-day Canada and the United States have been inexorably linked. Our founding pioneers, however, could not have anticipated fruition of government bureaucracies in a manner that brings red tape and differing regulations between Canada and the U.S., with the unintentional consequence of hindering the easy flow of goods and services in our integrated economy. One of the CABC's primary missions has been to ensure both countries collaborate to reduce regulatory differences between Canada and the U.S. The CABC continues to fight against regulatory disharmony to produce successive governments.
III. Align Voluntary Standards. Only about 10 percent of standards between Canada and the U.S. are currently harmonized, yet the U.S. Department of Commerce has estimated that standards conformity has an impact on more than 80 percent of global commodity trade and can cost companies billions of dollars a year. The CABC has called for the U.S. and Canada join forces to promote their mutual interests and to work with internationally accepted principles of standardization.
IV. Labor and skills. While the CABC supports labor mobility between Canada and the U.S., there are too many barriers preventing workers from moving with ease between the two countries. The CABC is calling for an examination of those barriers, pushing to alleviate the issues by having various industry and education sectors work together to determine what skills needs to be taught in schools, to promote efficient certification of those skills on both sides of the border, and to ensure there's mutual recognition by both countries of the skills certification stands used in both places.
From our common border, to the Artic, to taking part in joint operations through NORAD and NATO, our two countries have long shared deep interests in defense in security in North America. The CABC advocated for the Shiprider program that allows the RCMP and U.S. Coast Guard to work together to protect waterways along the border given how interconnected our security interests are. The Permanent Join Board on Defense is also an important tool for the armed forces in Canada and the U.S. to exchange views and share information regarding joint security. The CABC advocates for policies that advance our shared security including improvement in information sharing and working against proposals that fail to recognize our mutually beneficial security arrangement. For example, CABC has argued against placing tariffs on Canadian aluminum and steel as such tariffs are disruptive to our joint defense and security arrangements.
While the North American economy enjoys sound fundamentals and many advantages, it is currently experiencing an "innovation problem" which the government and its stakeholders, including CABC, are committed to addressing. The CABC suggests strengthening links between Canada's science base industry, reframing the legal framework for innovation including the patent system, improving the access of innovative small and start-up firms to risk capital, and making capital available for early stage commercialization of innovation. Additionally, to enhance Canadian innovation in particular, the CABC is looking to modernize the NAFTA in several important ways. For North American to succeed, the innovation potential of each country, each state, and each province must be fully realized. A more innovative Canada will directly benefit all of North America. For this, we recommend that Canada and the US leverage our strong fundamentals to improve our innovation ecosystem to be fully competitive with peer countries in order to enhance continental competitiveness in the years ahead.
Canada and the United States have deeply integrated infrastructure, the integration of electricity grid and pipelines, for example, enables economic growth. The election of President Trump, and his intention to spend billions on infrastructure, there are opportunities for Canadian suppliers, and capitol. While physical infrastructure remains a large connection between our two countries, technological and artificial intelligence shared between the U.S. and Canada enable big advances and reward innovation. The CABC advocates policies that enable and reduce the barriers to cross-border data flows and advance an innovation agenda that grows the economy of North America. High technology industries in Canada and the U.S. will remain competitive globally to the extent that they can innovate and apply the best trained and best educated human capital to rive new technologies.
Digital Recommendations for NAFTA 2.0
Digital technologies are creating enormous opportunity in every sector of the economy. Some estimates peg digital trade at half of all trade globally and growing. According to McKinsey, cross-border data flows generated $2.8 trillion in economic value in 2014-a greater impact on world GDP than global trade in goods.
In an increasingly competitive global market, it is essential that our nations establish a coherent framework of rules that facilitate digital trade, harmonize existing regulations, and promote investment in new technologies and business models. By modernizing NAFTA for the digital age, we will strengthen the North American economy, accelerate growth, and promote the creation of well-paid knowledge sector jobs.
In developing a thoughtful-and we hope, useful-digital trade framework to inform NAFTA modernization efforts, we used the following set of guiding principles:
" Reduce complexity. International trade regulations are by nature complex. Adding digital technology concepts to the equation risks adding to that complexity. We've tried to share in plain English enough about these issues for non-technical readers to understand why they are important, and how our recommendations would benefit the people of all member nations.
" Take the long view. Particularly in the case of emergent technology, not all outcomes are foreseeable. Where the long-term implications are unclear, take small steps and Incorporate mechanisms to measure impact. In addition, build in mechanisms that allow member nations to tweak the agreement when needed, based on the data.
" Alpha, beta, live. Digital services are developed iteratively and made better through the incorporation of user feedback. The same should be true of a digital trade chapter. We haven't developed this report to be inserted whole into trade text. We don't presume to have all of the answers-on many of these issues, our goal is to kick start better informed conversations about meaningful policy options.
The Canadian American Business Council is recommending NAFTA 2.0 incorporate provisions in four areas:
1. Data. We believe that promoting cross-border data flows -- with privacy and security protections in place -- will allow all parties to better leverage the currency of the 21st century.
2. Infrastructure. The digital economy requires scale that can effectively meet demand across North America, while also leaving room for innovative businesses to emerge and grow.
3. Products and services. An open market for digital goods and services will foster tremendous innovation and allow for efficiencies across all North American markets.
4. Intellectual property. In a competitive global economy, a coherent intellectual property framework is needed to enable technical breakthroughs while maintaining a sufficiently competitive environment.
Pharmaceutical Recommendations for NAFTA 2.0
While there are differences between the Canadian and United States health care systems, we share a commitment to promoting the development of and facilitating access to high-quality pharmaceutical products and medical devices, as a means of continuing to improve health. The modernized NAFTA should reaffirm the importance of the following:
a) adequate access to pharmaceutical products and medical devices in providing high quality health care;
b) patented and generic pharmaceutical products and medical devices in reducing other more costly medical expenditures;
c) sound economic incentives and competitive markets for the efficient development of and access to patented and generic pharmaceutical products and medical devices;
d) appropriate government support of research and development in academic and commercial laboratories, intellectual property protections, and other incentives for innovation in the research and development of pharmaceutical products and medical devices;
e) promoting innovation and timely and affordable access to safe and effective pharmaceutical products and medical devices through transparent and accountable procedures, without impeding the regulator's ability to apply appropriate standards of quality, safety, and efficacy;
f) ethical practices by pharmaceutical and medical device manufacturers and suppliers and by health care providers on a global basis in order to achieve open, transparent, accountable, and reasonable health care decision-making;
g) To the extent that governments maintain procedures for listing pharmaceutical products, medical devices, or indications for reimbursement, or setting the prices of and/or amount of reimbursement for pharmaceutical products or medical devices, it is important to ensure that the procedures, rules, criteria, and guidelines that apply to the listing of pharmaceutical products, medical devices, or indications for reimbursement, or setting the amount of reimbursement for pharmaceutical products or medical devices are fair, reasonable, non-discriminatory, and appropriately value the innovative nature of the products.