FAIT Committee Report

LIST OF RECOMMENDATIONS

CHAPTER 1: TOWARDS A STRATEGIC NORTH AMERICAN DIMENSION OF CANADIAN FOREIGN POLICY

Recommendation 1

The Government of Canada should explicitly make Canada’s relations with its North American partners an overall policy priority. In that regard, and particularly in terms of defining the North American dimension of Canadian foreign policy, the Government should elaborate a coherent public strategy for advancing Canadian interests and values in the context of North America, including Mexico, beginning with its comprehensive response to the recommendations in this report. (p. 31)

Recommendation 2

The Government should address Canada’s diminished international policy capabilities in the next and future budgets, ensuring that sufficient resources are provided to allow the Department of Foreign Affairs and International Trade to provide leadership in developing and implementing a strong, credible, strategic framework for Canada’s relations with its North American partners. (p. 33)

Recommendation 3

The Government should also ensure that there is coherence and coordination among all federal activities in which significant North American relationships are involved. To that end, consideration could be given to creating a special Cabinet Committee on North American Relations. Such a high-level committee could be co-chaired by the Deputy Prime Minister and the Minister of Foreign Affairs and could include other ministers with important responsibilities that relate to North American issues. (p. 33)

Recommendation 4

In order to encourage further public engagement focused on Canadian objectives in North America, the Government should consider convening national and/or regional roundtables on North American relations following the public release of an initial policy statement. Such a consensus-building process should be carried on as warranted by evolving circumstances. (p. 34)

Recommendation 5

Given the increasing involvement of non-federal actors in many aspects of North American relations, the Government should consider how best to take into account the interests of other levels of government — on a cooperative basis and through an established process of consultation with provinces, territories, and municipalities — within an evolving Canadian strategic policy framework for advancing these relations. (p. 35)

CHAPTER 2: UNDERSTANDING A CHANGING NORTH AMERICA

Recommendation 6

In order to better position Canada and Canadians to meet the challenges of a rapidly changing North American policy environment that includes Mexico, the Government should:

Recommendation 7

The Department of Foreign Affairs and International Trade in particular should look at ways to deepen knowledge and understanding of Canada’s North American relationships, particularly with the United States and including those with Mexico. DFAIT should also promote public engagement in better defining and promoting Canadian foreign policy objectives in North America. For example, the Canadian Centre for Foreign Policy Development could be tasked with building links in this regard among foreign service professionals, parliamentarians, academics, other researchers, interest groups, and civil society organizations. Information technologies could also be used to improve interactive connections with the public at large. (p. 52)

CHAPTER 3: THE FUTURE OF SECURITY AND DEFENCE COOPERATION IN NORTH AMERICA

Recommendation 8

The Government of Canada should increase its bilateral security cooperation with Mexico. The Government should also examine means of beginning a trilateral dialogue with the United States and Mexico to explore common perspectives on security issues in North America. (p. 86)

Recommendation 9

The Government should produce an annual report to Parliament reviewing in detail the status of the “Smart Borders” process. The ministers responsible for the implementation of border security measures should also appear before the relevant committees of both houses of Parliament on the substance of that report. (p. 96)

Recommendation 10

While acknowledging potential legal restrictions, the Committee recommends that the House of Commons establish a Standing Committee on Security and Intelligence, with appropriate secure premises, dedicated and cleared staff and other requirements. In addition, the ad hoc Cabinet Committee on Public Security and Anti-Terrorism should be replaced by a permanent Cabinet Committee on National Security. Further, the Government should institute a review of Canada’s intelligence services and report the findings to Parliament. Finally, the Government should also facilitate increased parliamentary oversight in this area by the new Standing Committee on Security and Intelligence recommended above. (p. 98)

Recommendation 11

The Government should make public all relevant agreements under which Canadian military planners will participate in the newly proposed planning and monitoring group to be co-located at NORAD headquarters. In order to allow for a full public debate over the group’s usefulness and broader implications, the Government should also prepare and table a report on the work of this new group before the next renewal of the NORAD agreement. (p. 106)

Recommendation 12

The Government should not make a decision about missile defence systems being developed by the United States, as the technology has not been proven and details of deployment are not known. However, the Government should continue to monitor development of this program with the Government of the United States and continue to oppose the weaponization of outer space. (p. 112)

Recommendation 13

Taking into consideration the forthcoming reviews of Canada’s foreign and defence policy, and recognizing the important contribution of the Canadian Forces in achieving Canada’s foreign policy goals, the Government should commit itself to substantially increased and stable multi-year funding for the Department of National Defence.
(p. 115)

Recommendation 14

In view of the changed security environment in North America since September 11, 2001, the governments of Canada and the United States should expand the mandate of the Permanent Joint Board on Defence to include relevant security issues and officials. The Government of Canada should also facilitate interactions between the Board and Canadian Members of Parliament, and encourage the Government of the United States to do likewise.

More generally, the Canadian Ministers of Foreign Affairs and National Defence along with the U.S. Secretaries of State and Defense — and other relevant Cabinet members as may be necessary — should meet at least once a year, alternating between Canada and the United States, to discuss mutual defence and security issues. These meetings should be coordinated with the Permanent Joint Board on Defence. (p. 116)

CHAPTER 4: KEY ISSUES IN MANAGING AND ADVANCING THE NORTH AMERICAN ECONOMIC RELATIONSHIP

Recommendation 15

The Government of Canada should resist the temptation to seek short-term gains through reactive, ad hoc solutions to trade problems with NAFTA partners. Wherever possible, trade disputes should be addressed through rules-based, institutional mechanisms, and the Government should use its best efforts to improve and expand such mechanisms on a continental basis. (p. 132-133)

Recommendation 16

The Government of Canada should work with Mexico to encourage the United States to agree to improve the rules-based foundation of the general dispute settlement mechanism in Chapter 20 of NAFTA. The final reports of arbitral panels should be made automatically legally binding on the parties to the dispute. In the event that such a change is not possible, the Government should strive to make maximum use of the multilateral dispute settlement mechanisms under the WTO for resolving disputes that arise under Chapter 20 of NAFTA.

In addition, the Government should work towards increasing the transparency of the dispute settlement process by releasing all documents relevant to a proceeding, without causing prejudice to companies. The Government should also work toward increasing the openness of the process by enlarging participation beyond the NAFTA states to interested third parties, such as provinces, non-governmental organizations and others. (p. 136)

Recommendation 17

When a NAFTA binational panel finds that the final determination by a government agency to impose anti-dumping or countervailing duties was in error, all duties should be repaid by the domestic authority to the foreign exporter. The Government of Canada should therefore propose to its NAFTA partners a formal system for the repayment of all duties, retroactive to the date set by any preliminary and/or final determination imposing duties. (p. 141)

Recommendation 18

The Committee supports the ongoing use of the Chapter 19 binational panel review procedure — and, where appropriate, the WTO dispute settlement system — and recommends that the Government of Canada continue to pursue all possible legal avenues for the efficient resolution of current trade disputes, especially the softwood lumber dispute. (p. 144)

Recommendation 19

Taking into account similar negotiations currently underway in the WTO forum, the Government of Canada should vigorously pursue consultations with Mexico and the United States under Article 1907 of NAFTA in order to actively engage them in the development of a common North American anti-dumping and countervail regime.
(p. 144)

Recommendation 20

The Government of Canada should generally refrain from linking different trade sectors as a strategy for retaliation or dispute resolution. Canada should focus on addressing each dispute on its own terms, and within a rules-based framework. (p. 145)

Recommendation 21

In light of the United States’ recent policy change with respect to aspects of Chapter 11 of NAFTA, the Government of Canada should review as soon as possible with Mexico and the United States elements of Chapter 11 that have proved problematic, in particular the investor-state provisions. (p. 153)

Recommendation 22

The Government of Canada should discuss with its Mexican and American counterparts ways to ensure adequate funding and enforcement powers for the North American Commission for Environmental Cooperation created under the North American Agreement on Environmental Cooperation. (p. 155)

Recommendation 23

The Government of Canada should initiate discussions with the governments of Mexico and the United States on ways to improve the enforcement of labour laws and standards under the North American Agreement on Labour Cooperation (NAALC). Ensuring adequate funding for the NAALC Secretariat should also be discussed.
(p. 157-158)

Recommendation 24

The Government of Canada should initiate discussions with Mexico and the United States on the feasibility of developing a permanent North American court on trade and investment that would consolidate the existing NAFTA dispute settlement processes under a single trinational juridical body. (p. 162)

Recommendation 25

Given the critical need for new infrastructure at key Canada-U.S. border locations, the Government of Canada should accelerate its efforts to construct such infrastructure at existing border points and more actively encourage its American counterpart to do the same. (p. 170)

Recommendation 26

The Government should ensure that the number of customs and immigration officers at the border matches current requirements, given the new security demands imposed on these officials. Training and the equipment available to border officers should be enhanced. (p. 170)

Recommendation 27

The Government should thoroughly review the set of customs regulations currently administered by customs officials within the Canadian Customs and Revenue Agency, with a view to their modernization. Border officials should be fully versed in any resulting changes so that they can deal more effectively with today’s border realities. (p. 171)

Recommendation 28

The Government should undertake a thorough review of long-term options for the Canada-U.S. border and present its findings to the public. This assessment should include an evaluation of the European Union’s experience in easing the movement of goods and individuals between most of its member countries and an analysis of the implications of establishing a security perimeter around North America. (p. 171-172)

Recommendation 29

To ensure that the Canadian economy remains competitive within an increasingly integrated North American economy, and to boost living standards in Canada, the Government should urgently implement additional measures to help reverse the Canada-U.S. productivity gap. Emphasis should be placed on providing tax and regulatory relief, working together with the provinces to eliminate barriers to inter-provincial trade and generating investments in Canada’s labour force. (p. 174)

Recommendation 30

When evaluating measures to ease the burden that different regulatory systems can impose on companies undertaking business in North America and to avoid the drawbacks of regulatory harmonization, the Government of Canada, in consultation with the provinces, should seriously consider entering into agreements with its NAFTA partners to implement mutual recognition schemes for existing regulations. Under such arrangements, countries would recognize each other’s regulatory standards as appropriate, thereby facilitating cross-border commerce. (p. 191)

Recommendation 31

The Government of Canada should consider undertaking a two-track approach to North American economic integration. Identified barriers to more efficient conduct of cross-border business should be removed in an incremental manner in conjunction with Canada’s NAFTA partners. While the Committee has taken no position on the merits of a North American customs union, we believe it would be useful for the Government concurrently to initiate a detailed review of the advantages and disadvantages of the concept in the North American context. The review could include an assessment of the use of the integrated North American steel industry, among others, as a prototype for a broader customs union of some kind. (p. 194)

Recommendation 32

Given that certain vital preconditions to North American monetary integration (e.g., similarity in the economic structures of NAFTA participants, existence of labour mobility across borders, availability of a fiscal transfer system) are not presently met, the Government of Canada should oppose any current calls to abandon its existing flexible exchange-rate system. The Government should continue to carefully review its long-term currency options and, in so doing, assess the extent to which the Canadian economy is already dollarized and any associated impacts. (p. 209)

CHAPTER 5: A CANADIAN AGENDA FOR ENHANCING BILATERAL AND TRILATERAL RELATIONS IN NORTH AMERICA

Recommendation 33

The Government of Canada should increase both the number of DFAIT personnel resident in Washington and the number of Canadian diplomatic consulates in strategic locations elsewhere in the United States. It should also again increase the advocacy funds available to DFAIT, and consult with industry groups and others in the design of targeted and coordinated information campaigns. (p. 230-231)

Recommendation 34

The Government of Canada, using the new Cabinet Committee on North American Relations we have recommended, should identify specific areas of interest for enhanced cooperation. Specifically, the Government should encourage the United States to designate a high-level political representative and should pursue the model of cooperation that has been developed in the security field by the current Canadian Deputy Prime Minister and the current U.S. Homeland Security Director, proposed to become Secretary of the new Department of Homeland Security. (p. 232)

Recommendation 35

The Government of Canada should work to develop closer relations with Mexico, in particular through:

Recommendation 36

Canada should approach the United States and Mexico with a proposal for a trilateral North American cooperation framework under which the heads of government of the three countries would meet at least annually, and preferably every six months, on a prepared, mutually agreed agenda relating to matters of shared North American concern. Under this framework, foreign ministers and other ministers as appropriate should also be encouraged to have periodic trilateral meetings. A small supporting secretariat could be supplied by the host country on a rotating basis. In addition, Canada should investigate further options for enhancing this level of trilateral intergovernmental interaction on a more permanent and sustained basis. (p. 265)

Recommendation 37

Consideration should be given to the following Canadian initiatives aimed at strengthening parliamentary cooperation on a North American basis:

Recommendation 38

The Government of Canada should propose to the governments of the United States and Mexico the setting up of a small advisory high-level expert panel on the future of the trilateral North American partnership. The panel’s mandate would have to be mutually agreed by the governments, and it would have to be given sufficient time to consult widely within the three societies before making its findings public. Such a panel could be asked to conduct an in-depth examination of the feasibility and desirability — notably from the standpoint of democratic transparency and accountability — of options for new trilateral institutions, including:

Recommendation 39

The Government of Canada should propose that the first formal North American leaders summit, on the model we have suggested, undertake to identify key sectors on which there is agreement to pursue enhanced trilateral cooperation as a matter of priority. On that basis, a framework for trilateral cooperation should be developed for approval at a future summit, and progress in its implementation should thereafter be reviewed systematically at each summit meeting. The expert panel that we have recommended be established to advise on the future of North American partnership could also be tasked with providing an assessment of policy sectors that show the greatest potential for strengthened trilateral cooperation. (p. 271)