Building a Secure and Competitive North America: 2007 Report to Leaders from the North American Competitiveness Council (NACC)

August 2007

Download the full report (PDF)

OVERVIEW

In March 2005, the Leaders of Canada, Mexico, and the United States launched the Security and Prosperity Partnership of North America (SPP). This initiative recognized two fundamental realities. First, September 11, 2001marked the beginning of a new era in which economics and security have become undeniably intertwined. Second, the transformation of global trade and investment by new economic powers such as China and India has made it vital for the North American partners to work together more effectively and efficiently.

Enterprises in all three countries need markets within North America to work seamlessly and securely if they are to survive and compete against increasingly aggressive global competitors and mounting security threats. Because economic activities within North America have become so closely integrated, Canada, Mexico, and the United States must consider the potential complementary nature of greater trilateral and bilateral economic and security cooperation in making policy and regulatory decisions, or else we risk the erosion of the competitive advantage created by the North American Free Trade Agreement (NAFTA).

At their 2006 Summit, the Leaders recognized that to accelerate progress under the SPP, they would benefit from direct advice from the front lines of the private sector. They subsequently encouraged business leaders from all three countries to form the North American Competitiveness Council (NACC). Today, the NACC is offering its first report to Leaders. This document outlines the work that we have done in our first year and a half and offers reflections on the progress that has been made to date and on our mandate moving forward.

We see the SPP as both strategic and realistic. Its scope is ambitious, but its approach is to achieve great progress through many small steps and, where feasible, to build on existing systems and processes. The fundamental principle of the SPP is to promote common-sense solutions to deal with practical issues in practical ways, which can help the economies of all three countries work better while improving security and quality of life throughout North America.

The greatest challenge in managing an agenda as broad as that of the SPP is to maintain both momentum and coherence. One of the first actions undertaken by the NACC was to focus on initiatives of immediate importance within the broad scope of the SPP and to propose concrete recommendations for action. The NACC decided to concentrate its initial work in three areas: bordercrossing facilitation, standards and regulatory cooperation, and energy integration. We submitted an initial report to the security and prosperity Ministers in February 2007, making a total of 51 recommendations for actions both within and building upon the SPP that would have a meaningful impact on improving the competitiveness of our three economies.

We were pleased with the positive reception of our report by the Ministers at the February meeting, in Ottawa, and are encouraged that all three of our governments have committed themselves to taking action on many of our recommendations. It is vital that the momentum of our work not lose speed as there is still much to do. Progress will depend on continuing close cooperation and information-sharing in comparable formats between the NACC and our respective governments.

We already are seeing significant progress in many areas. In border crossing facilitation, we would note, in particular, considerable advancement in emergency management planning, important steps toward a new crossing at Detroit-Windsor, and the signing of the United States-Mexico Megaports Agreement. In standards and regulatory cooperation, governments are close to completing two short-term recommendations — a trilateral Regulatory Cooperation Framework and a trilateral Intellectual Property Rights (IPR) strategy — and are making progress on specific recommendations affecting food and agriculture, financial services, insurance, trucking, and electronic trading.

On the energy front, Ministers are working together trilaterally to promote the development of specialized skilled labor, to develop a North American energy outlook, to expand the mandate of the North American Energy Working Group (NAEWG), and to identify opportunities for development of biofuels.

In a handful of areas, however, the effort to make borders within North America more secure and more efficient has run into serious roadblocks that require intervention by the Leaders. We are particularly disappointed by the suspension of negotiations on the land preclearance pilot project planned for the Peace Bridge crossing between Buffalo and Fort Erie and by the failure to withdraw the United States Animal and Plant Health Inspection Service (APHIS) interim rule which removed the exemption from user fees for all conveyances and airline passengers originating in Canada.

While we have seen some welcome flexibility within the Western Hemisphere Travel Initiative (WHTI), we remain concerned about its potential to lead to higher costs and greater delays at borders. We urge governments to take whatever time is needed to develop an effective, integrated, and efficient system that incorporates the acceptance of accessible and economical alternatives to a passport, such as secured driver licenses. Finally, we are disappointed by the indication from Mexico that it is not ready to move ahead with our recommended negotiation of an air cargo liberalization accord with the United States that would include "fifth freedom" rights.

The SPP is an effective vehicle that serves the interests of all three countries by working together in practical ways to make our people more secure and our enterprises more competitive globally. To do this, we need safe and transparent borders within North America, simple regulations that make sense and ensure safety, and reliable access to cost-effective energy. The NACC is pleased to have added value and rigor to the SPP through our first set of recommendations and we look forward to making additional contributions in the future. In this regard, we stand ready to offer continuing advice both on practical short-term measures within the SPP agenda and other strategic issues affecting the competitiveness and security of the North American economies.

Our most critical request to the Leaders is for them to ensure that the SPP remains a dynamic and effective path forward for trilateral and bilateral cooperation. Above all, we urge the Leaders to make it clear to all levels of their governments that sustained progress on the SPP agenda is a strategic priority. This must involve an effective system of tracking and monitoring current initiatives, in addition to identifying and acting upon new and emerging priorities. The North American private sector is committed to doing its part both in shaping a more competitive and secure North America and in helping build a better understanding of how this serves the interests of the people in all three countries. We thank the Leaders for their confidence and
support and look forward to building on the strong base that has been established.