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Security Prosperity Partnership

Security Prosperity Partnership

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05/25/2010

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Saving the North American Securityand Prosperity Partnership: The Case for a North AmericanStandards and Regulatory Area
by Alexander Moens with Michael Cust 
Executive Summary / 1 The Launch and Development of the Security andProsperity Partnership / 4Political Challenges to the SPP / 8Canada’s Interests in the SPP / 11HowCanadaCanBenefitbyUsingtheSPPtoReduceTradeBarriers / 13Measuring the Results of the SPP / 16 The Value of the SPP Process / 18Conclusion / 19Recommendations / 20References / 26Acknowledgements / 32About the authors / 32Publishing Information / 33About The Fraser Institute / 34
March2008
Digital 
Publication
FRASER INSTITUTE
 
ExecutiveSummary
TheSecurityandProsperityPartnership(SPP)launchedin2005bytheUnitedStates,Canada, and Mexico, is an overarching agreement to conduct negotiations in a wide varietyofareasrelatedtoproductstandards,governmentregulationsontrade,healthandfoodsafety,energy,andtheenvironmentaswellasawidevarietyofsecuritymea-sures related to border crossings. The objective is to achieve gradually more regula-tory convergence and product standards compatibility as well as more streamlinedborder and security measures so that the costs of trade and border crossings can belowered,whilestandardsandregulationsbecomemorecontinent-wide.SPPnegotia-tions aremeant tolead tospecificagreements on asector-by-sectorbasisand mainly affect changes in the administrative or executive branches of government. Thus far,SPPnegotiationsandagreementshavemodestlyadvancedCanada’snationalinterestby removing or reducing non-tariff barriers to trade. Closer cooperation and coordi-nation among the governments has also helped make the implementation of post-9/11 security provisions more efficient.The objective of the SPP talks is very much in Canada’s economic interest andwillbenefitNorthAmericancompetitiveness.With51percentoftotalexportstotheUnited States going out of Canada by truck, and 77 percent of imports from theUnited States coming into Canada by truck in 2006, low-cost border crossing shouldbe an integral part of Canadian policy. However, regulatory differences are a provenbarrier to cross-border trade. These differences include the processing of customsmanifests, security documents, and procedures. Furthermore, regulatory differencesoneithersideoftheborderforidenticalproductsimposeanartificialcostonproduc-tion that is rendering North American business less competitive globally.The Canada-United States Free Trade Agreement (CUFTA) and the NorthAmerican Free Trade Agreement (NAFTA) have generated strong growth in trade,especiallyforCanadianexports. Similarly, regulatoryharmonization and compatibleproductstandards,aswellasmoreefficientandlower-costcross-borderregimes,willmake Canadian industry more competitive and will add to Canadian prosperity. AsCanada is the bigger exporter in the Canada-United States bilateral trade relation-ship,thebruntofthecurrentstandardsandregulatoryincompatibilityaswellasbor-der inefficiencies are borne disproportionately by Canada.SPP negotiations are conducted by officials in the various government depart-mentsofthethreecountriesandbenefitfromtheadviceofbusinessgroupsinidenti-fyingareaswheremorestandardcompatibilityandmoreharmonizedregulationsaremost pressing. The SPP consists of technical talks conducted by expert officials.
TheFraserInstitute / March2008www.fraserinstitute.orgSavingtheNorthAmericanSecurityandProsperityPartnership
1
 
These are not high-level diplomatic talks aimed at negotiating a new treaty likeNAFTA, which would require Senate approval in the United States and for whichthere is no political interest in the American political system at this moment. How-ever,theallegationthattheSPPiswithoutoversightoraccountabilityisfalse.Imple-menting specific SPP agreements is at the discretion of each country and subject toregular rules of executive-legislative rule-making.Bilateral (rather than the trilateral format of SPP) Canada-United States coop-eration on regulations and standards, especially regarding the border, would bebetterforCanadianinterestsasCanadian-Mexicantradeinproductsandservicesisatiny fraction of the Canada-United States trade, and the two borders face very differ-ent challenges. However, the SPP is the only politically agreeable format for all threecountries at this time, though there are, of course, other negotiations on specificissues going on that are not part of the SPP. The SPP framework allows for separateCanada-United States agreements to go ahead of the trilateral ones. This concept isreferred to informally as “three shall talk, but two can walk.”The three governments involved in the SPP are not contemplating any form of politicalintegration. Canada, the US, and Mexico arenot following the pathofEuro-peanpoliticalintegrationoranyformofsupranationalism.Still,SPPhasbeenturnedinto a supranationalist conspiracy theory by left-wing economic nationalists in Can-ada and right-wing protectionists in the United States. They allege various conspira-cies from secretive water and superhighway deals, to a North American politicalunion taking over the United States, or an American take-over of Canada.As a result of these attacks as well as the public’s perception that the last NorthAmericansummitinMontebelloin2007producedfewconcreteresults,SPPislosingmomentum in the public realm. Neither Prime Minister Stephen Harper nor Presi-dent George W. Bush seems willing to invest new political capital in the talks at thispoint to overcome the loss of momentum.LettingSPPfallbythewaysidewouldbeamistake.AlistofresultsfromtheSPPtalks since 2005 shows modest but useful outcomes. It is more difficult to measurethevariousdeclarationsandnewforaandprocessessetinactionbySPP,asonlysomemayproducefutureresults.Still,giventheabsenceofanyalternativefollow-ontotheNAFTA process, the SPP should be preserved and expanded. The ultimate goalshould be to create a North American Standards and Regulatory Area (NASRA).This paper concludes that the Canadian government must create both short-andlong-term strategiestoexpandandspeedupthe SPP goals. Re-brandingthe SPPtalks and making them more productive, as well as explaining the specific objectivesof the talks to the public must be the priority of the SPP summit in April 2008.
TheFraserInstitute / March2008www.fraserinstitute.orgSavingtheNorthAmericanSecurityandProsperityPartnership
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