FAIT Committee Report

PREFACE

In December 2001, the Committee released a Preliminary Report, Canada and the North American Challenge: Managing Relations in Light of the New Security Environment, based on a series of hearings held in the aftermath of the September 11 terrorist attacks on the United States. Members of our Subcommittee on International Trade, Trade Disputes and Investment also focused specifically on Canada-U.S. border issues in a November 2001 report, Towards a Secure and Trade-Efficient Border, and made a number of recommendations to which the Government responded in the spring of 2002.

More than a year after the attacks on the World Trade Centre and the Pentagon, the Committee continues to have concerns that relate to both security of borders and trade. We are also acutely aware of the enduring impact of the consequences of those attacks, including an understandable preoccupation with guarding against possible future terrorism, on regional and global developments and as well — and above all — on American public policy and opinion. At the same time, as indicated in our December 2001 report, Canada’s management of these critical issues needs to be seen in the larger and longer-term context of how Canadians want North American relationships to evolve. What is the overall strategic foreign policy vision that should guide Canada’s course of action in the coming years?

Prior to September 11, 2001, the Committee had already been planning a study of key questions involving Canada’s relations with the United States within the North American Free Trade Agreement (NAFTA), as well as looking to the future of continental ties including those with Mexico. Some of these questions have become more pressing; none has disappeared. In the December 2001 report, we stated that “the Canadian national interest in the “North American project, whatever it turns out to be, is still to be defined.” We emphasized that the next phase must be to listen to the ideas of Canadians across the country and to raise these matters with our partners in North America. Canada must set its own goals and priorities for future relations, but these are unlikely to be realizable without a sound appreciation of developments in the United States and Mexico, among the factors shaping the North American policy context.

The Committee has followed through during the first half of 2002 with an extensive series of public hearings and panels. Beyond the eight that were held in Ottawa, the Committee undertook 16 days of hearings in 12 other centres across Canada. A first round of regional hearings took place in the Atlantic provinces and in Québec in late February. A second round was held in the four western provinces and southern Ontario in early May. In each case, for reasons of economy and efficiency, these hearings were combined with parallel consultations on the G8 Kananaskis Summit agenda. Prior to the hearings, a series of staff discussion notes with questions was posted on the Committee website in order to stimulate response to policy options; these questions proved very successful in eliciting witness reactions and recommendations.

In addition to the Committee’s hearings within Canada, members also held meetings with government officials, congressional counterparts, and non-governmental experts in the United States and Mexico. Our meetings in Washington, D.C., in March 2002 coincided with the six-month anniversary of September 11. Members then travelled to Mexico City, where the first formal joint meeting of foreign affairs committees from the two federal parliaments was held in the Mexican Congress on March 13. A number of prominent Mexican witnesses were also heard from in four subsequent panel sessions.

All told, the Committee has benefited from several hundred submissions in the form of oral testimony and written briefs. We are grateful to all those we have engaged in the process for sharing their time and putting their thoughts on the public record. The input received has been invaluable to our deliberations and is reflected throughout the report. Indeed, the diverse range of what we heard is highlighted by drawing from witnesses’ own words in the report that follows.

The report is divided into two main parts and five chapters. Part I, “Canada in North America: Meeting the Challenge”, introduces the key issues and factors to be taken into account in the development of a forward-looking Canadian policy. Chapter 1, “Towards a Strategic North American Dimension of Canadian Foreign Policy”, outlines options for North American policy approaches and gives an overview of the varied perspectives brought to bear by witnesses on key questions and choices. Often these related to concerns about Canada’s sovereignty and freedom to manoeuvre in the context of continental integration. This chapter also looks at the ongoing implications of September 11 on Canadian policy options for realizing both North American and wider objectives. The chapter culminates in a series of overarching recommendations for pursuing a coherent and proactive Canadian strategy for North American relations, one that builds the capacity for Canadian priorities to shape a bilateral and trilateral North American agenda.

Completing Part I, Chapter 2, “Understanding a Changing North America”, takes a more in-depth look at the evolving North American region. Beyond providing a detailed overview of growing economic linkages and integration developments within North America, this chapter also reviews other significant societal trends, variations, and persistent disparities within and across the three countries. Relevant findings are included from some recent research on national identities and citizens’ attitudes towards North American issues. Witness views on how North American relationships should be considered in relation to Canadian interests and values point not only to continuing divergences of approach, as noted earlier, but also to deficiencies in knowledge across the three countries. There is no obvious agreed path that North American relations should take; moreover, much remains to be done in developing a better understanding of the key issues and in positioning Canadians to respond to regional challenges in a rapidly changing North America. These realities should be borne in mind when considering which forms of North American partnership and specific policy directions could best serve Canada’s objectives.

Part II of the report, “Canadian Priorities for Advancing North American Relations”, contains the three core chapters dealing with Canada’s policy priorities in the North American context, beginning with those that have been most clearly affected by the aftermath of September 11. Chapter 3, “The Future of Security and Defence Cooperation in North America”, focuses primarily on Canada-U.S. security concerns, notably at air, land, and sea borders, and on defence arrangements. It also discusses how Mexico might be included in cooperative efforts. Among the more contentious issues addressed are how Canada should respond to major U.S. initiatives such as plans for missile defences and the decision to create a military Northern Command.

Chapter 4, “Key Issues in Managing and Advancing the North American Economic Relationship”, looks at ways to improve existing bilateral and trilateral trade and investment flows, at the border and elsewhere. While NAFTA is approaching its first decade of implementation, there is still much unfinished business, ranging from addressing trade remedies and dispute resolution mechanisms (including those of Chapter 11 on investment) to managing environmental and labour cooperation, to assessing the prospects for new institutions. While the longstanding Canada-U.S. dispute over softwood lumber is one of the most obvious ongoing irritants, the chapter also goes further to address the growing debate over managing broader economic integration trends. It discusses witnesses’ views and assesses both “top-down” and “bottom-up” options in relation to various proposals for potentially closer and deeper integration arrangements, such as a customs union, a common market, and a common currency.

Chapter 5, “A Canadian Agenda for Enhancing Bilateral and Trilateral Relations in North America”, looks at the major elements in developing effective political strategies for managing Canada’s North American relations. The introduction to this chapter focuses the need to consider what combination of bilateral and trilateral approaches might best serve to advance Canadian interests in the future. The first section then concentrates on the critically important Canada-U.S. relationship and on the challenge of strengthening diplomatic and other channels for Canadian influence. The next section affirms the increasing importance of relations with Mexico. It considers ways to strengthen this bilateral partnership and move beyond past limitations. One area in which Mexico is keen to work with Canada is in furthering trilateral forms of cooperation; ultimately, envisaging the construction of a “North American community”. This chapter’s third section reviews witnesses’ perspectives on the merits of promoting closer North American ties through trilateralism and the possible implications for democratic governance. It also goes further, to examine some ideas for pursuing trilateral approaches that could involve new institutional arrangements, more intensive intergovernmental and parliamentary cooperation, and practical measures undertaken jointly in particular cross-border policy sectors.

In view of the huge asymmetries of power and wealth among the three countries of North America, not to mention historical, cultural and other differences, it is not surprising that witnesses were sometimes divided on the merits of particular ideas and approaches. In furthering the North American partnership, the Committee believes that Canada must keep its options open while both pursuing elements of that partnership that are in the long-term Canadian interest and encouraging ongoing public debate over the available options.

This report is offered as a contribution to that necessary national debate, not as a definitive blueprint for the future of Canada’s relations with its North American neighbours. At the same time, the Committee is convinced that it is a matter of national priority to act now on developing a clear, concerted and coherent Canadian strategic vision for North America. The report’s concluding section on “The Committee’s Vision for Advancing Canada’s Objectives in North America” highlights in summary the key elements on which the Committee believes the Government must move in order to promote Canadian interests and values in the North America of the twenty-first century.

Events have moved quickly in the past year, and unforeseen challenges may emerge again as they did on September 11 last year. With the benefit of a public strategy for North American relations and the capabilities in place to implement it, Canada will be better prepared and positioned to advance its objectives, not only within North America but multilaterally and globally as well. In the Committee’s view, pursuing a sovereign and mature partnership within North America will best serve Canadians while commanding attention and respect on our own continent and beyond.