By: Elliott Smith and Jim Pettinger
Chris Sands has big ideas for improving border policy and boosting trade between the US and Canada. Dr. Sands spoke recently at WesternWashingtonUniversity where he is serving as Ross Distinguished Professor of Canada-US Relations.
Sands emphasizes that there has been much talk in recent years about so-called “smart borders,” relying more heavily on advanced technology, but there is a need to “educate” those “smart borders.” What he means is that it’s important for policymakers and stakeholders to understand the recent history of Canada/US Border diplomacy and policy in an era of increasing technological complexity and ongoing bilateral discussion about the future of border policy.
Border progress tracks US presidential terms in office
Sands finds US Presidential administrations a useful way to break up the periods of recent border history. It was in the Clinton years – the mid-1990s – that a conversation about borders came to the forefront of US political discourse. NAFTA (North American Free Trade Agreement) was ratified in that era, and a number of NAFTA working groups were created, along with side agreement institutions in an attempt to harmonize standards continent wide (US/Canada/Mexico). The Problem was NAFTA was politically unpopular, so US civil servants were disinterested in sticking their necks out to get rid of American standards. As such little progress was made towards harmonizing product standards and regulations, an important NAFTA goal in the effort to streamline and foster trade.
The 1996 Illegal Immigration Reform and Immigrant Responsibility Act in the United States was another significant Clinton-era development that affected border policy with Canada. The Act, which was drafted in response to California’s Proposition 187, contained the highly controversial Section 110, which required entry and exit recordkeeping at America’s borders. Canada strongly objected because, among other things, entry/exit tracking on paper forms would have slowed things down at the border. Canadian diplomacy was able to stave off implementation of section 110 for Canada.
Lessons of the Clinton years
Several lessons came out of the Clinton years. When the political cost was not too high, policymakers learned to engage in trilateralism. Otherwise, dual bilateralism was pursued. They learned to rebuild trust with limited, transparent initiatives. And they learned to avoid Congress. They also learned to emphasize Canada to avoid the US Political complications of including Mexico. Policymakers also learned in the Clinton years the importance of including stakeholders and civil society in border and trade initiatives.
Congress was poisoned by anti-Mexico sentiment, so Clinton avoided Congress for these issues. An attempt to unite US/Canada and US/Mexico Interparliamentary Groups was opposed by Clinton because it would drag the US/Canada agenda backwards by including Mexico.
Bush era continues momentum
The George W. Bush years saw the implementation of the Container Security Initiative, co-locating US and Canadian Customs authorities at ports like Montreal, Seattle and Tacoma, and then expanded abroad to places like Rotterdam. There was an effort at initiatives based on a “perimeter” concept for the continent that largely failed, largely due to their massive unpopularity in Canada. The substitute was “Smart Border Agreements” made up of concrete initiatives that had been advanced during the Clinton dialogues. Experience showed that focusing on concrete items was better.
During this time the US also created US NORTHCOM to coordinate military defense of the North American continent. This was not a treaty, but rather an American military creation with a liaison relationship with the Canadian and Mexican militaries. NORTHCOM was created unilaterally by the US, and was not received warmly by Mexico and Canada.
Another development of the Bush Era was the Security and Prosperity Partnership (SPP). This enterprise had political buy-in from the highest levels, so civil servants were willing to stick their necks out and engage. But the SPP’s lack of transparency quickly became problematic. It led ordinary citizens to think their governments were plotting the NAFTA superhighway, or something nefarious. Businesses were also not included. To have representation, the business community created the North American Competitiveness Council, which led to an invitation to participate in SPP.
Bush era adds more lessons
In the Bush era, policymakers learned the importance of linking the border and the economy. They came to understand the importance of having a transparent process, unlike a trade negotiation, and the need to have an open, renewable agenda. The Bush years also followed the Clinton pattern of keeping Congress out, and using the Cabinet instead. But Bush, unlike Clinton, wanted trilateralism to maximize US resources; when spending political capital the Bush Administration sought to maximize bang for buck.
Obama adds more chapters to the lesson book
The Obama Administration’s interaction with border issues got started in the Trilateral Guadalajara summit in 2009. The participants agreed that SPP had become a lightning rod that should be replaced with 10 specific projects. The participants also agreed to a Canadian principle “three can talk, two can walk” meaning that the US, Mexico and Canada can all openly talk about issues, but the US and Canada could move ahead together as a pair on a certain item if ready.
The Obama years have also seen a rise in dual bilaterlalism, such as the Clean Energy Dialogues and the North American Leaders Summit (NALS).
Lessons so far from the Obama Administration’s first term show that the American preference for trilateralism remains, but otherwise pursue dual bilateralism to conserve the President’s time and energy. Policymakers have learned to rebuild trust with practical, transparent, limited initiatives. Like its predecessors, the Obama Administration retains a penchant for avoiding Congress, and using the Cabinet instead. Slow and steady to preserve progress is a guiding principle for Obama administration policymakers. And Obama has been careful to make sure North American cooperative issues aren’t a lightning rod.
Dr. Sands’ report card – progress, but more education needed
Dr. Sands notes that two of his recommendations have been adopted recently by American policymakers: having a two speed approach to the Mexican and Canadian borders, and making stakeholder outreach a priority for customs port directors.
According to Sands, there remains room for improvement in policy development. Of specific interest to TradeTips readers, Sands says that greater involvement of the business community has to be achieved by policymakers. Additionally, Congress will have to be involved to some degree, because Congress can block progress if it dislikes the results that the Administration produces. “Plus,” says Dr. Sands, “Congress will have to fund new initiatives and the spread of best practices border-wide.” New initiatives have to have replicability, those ideas that can be reproduced easily are the “low hanging fruit” of improvement in border policy. There have also been numerous cases of pilot projects being prolonged; border agencies need to take ideas border-wide, and not just focus on pilots. New border management ideas need to have portability too, policymakers ought to think in terms of multiple fronts, one border logic. This is a slight adjustment to the Bush Administration’s logic, which held there ought to be “no low point in the fence” because that’s where the country would be vulnerable.
Dr. Sands notes that the model of NORAD and similar bi-national institutions ought be emulated for crafting innovative new border policy going forward. The most successful bilateral decisions, he noted, are de-politicized and made by joint US/Canada operations like the International Joint Commission, NORAD and the International Boundary Commission. These institutions don’t delegate up to officials, they delegate down to their own civil servants.
Another major goal for boosting US/Canada trade is to have regulatory cooperation as the “given,” or expected outcome, and let civil servants work out the details. In order to most efficiently accomplish this, Sands recommends a “Regulatory Big Bang”, declaring that by 2025 all products approved as safe in the US would be automatically be approved as safe in Canada. And, all products certified for safe sale in Canada would be recognized as such in the US. This, Sands argues, would turn regulatory negotiations upside down for greater efficiency. Such a framework would create a “negative list” where civil servants could say “Wait, not in this area, the Canadian standard is deficient here,” for example.
Increased productivity from the public sector is also needed to boost Canada/US trade. More work will have to be done with existing staff and institutional resources. For example, Sands cites the long backlog that exists for US automobile crash testing. The waiting period for an automobile manufacturer to get a vehicle crash-tested in the United States is quite long, as American resources in this area are stretched thin. The Canadian crash testers on the other hand, are quite well staffed. What if, says Sands, cars could be crash-tested in one country, and approved in the other? Ideally, a common set of standards could be adopted, but in the meantime, Canadian crash test officials could apply both the American and Canadian standards in their lab and certify for both the US and Canada in one round of testing.
The Automotive sector is a low-hanging fruit for starting this type of binational symmetry, say Sands, because there is already substantial corporate Canada/US cross-ownership in the sector. Further, the people who ride in cars in the US and Canada are generally similar (average height, weight, etc.), so standards could be easily harmonized because the goal – keeping similarly-sized people safe in a crash – is essentially unchanged on either side of the border. Pharmaceuticals are another area where cross-certification has promise. In clinical trials, the observed effects of a new medication on people in Ontario are unlikely to be different than what would be found on people in Massachusetts. Food Safety is another similar area Sands describes as a “low hanging fruit,” and he notes there has been progress in this realm.
Small business need to be involved
As new border policies are crafted, there is also a need to involve Small Business, Sands notes. Small businesses in Canada, the US and Mexico have in common a dislike of paperwork. A problem with some border initiatives like C-TPAT (the Customs-Trade Partnership Against Terrorism), is the extensive paperwork required for a business to enroll. If the paperwork requirements were reduced, more small businesses could engage in trade.
Challenges can be overcome
One big challenge faced by efforts to harmonize trade regulations is the fact that many regulations and standards were set up for political reasons in the first place. Canada, for example, has cultural rules to protect Canadian filmmakers, rules that Hollywood would like to see disappear but many in the Canadian film industry very much want to see preserved. But this is precisely why Sands believes in the idea of a “Regulatory Big Bang.” If it were announced that all standards and regulations would be harmonized automatically by 2025, it would force constituencies that believe they have a strong reason for continuing their particular protection to step forward and defend it. Such a process could very well allow the Canadian film industry, for example, to rally support for their industry’s protection, and if a groundswell of political support in Canada mustered to defend and preserve Canadian cultural protections they would remain. Meantime, a myriad of complex differing regulations that have no constituency and no real reason to remain would sunset, and international trade in North America would become cheaper and easier in a plethora of sectors.
An interesting question posed when discussing harmonizing standards on, for example, life vests, or side door crash requirements, or how drugs are labeled, is when do you ask the question “do you trust us?” Dr. Sands hails the Port of Prince Rupert as the model for the future, and the answer to this question. Canada Border Services Agency processes and tags a container when it arrives from overseas. When the container reaches the US border in Minnesota, US Customs and Border Protection trusts that CBSA has done its job and lets it through. NORAD is another good example of binational trust: the Canadian and US military personnel in charge have absolute and total trust between them. It poses the question: how do you get that kind of trust to filter down?
Sands notes that there are two competing models for trust, applied to a trade and regulatory harmonization context. One might be called a Customs Union model: Can we agree on one standard, or one tariff rate. The same model might be called the Defense model: We have the same protocols. This model applied to trade would say that we have the same standards for consumer products, and that we trust you’re competent to enforce them. At the operational level, with one set of standards, less trust is needed. Those enforcing the rules can say to one another ‘All we need is to trust that you’re competent to meet our shared standards.’
The second model, and where many joint Canada/US operations presently are, actually requires more trust. With separate standards, a higher level of trust is required at the operational level. CBP officials in Minnesota have to trust that their CBSA counterparts in Prince Rupert are competent not only to enforce Canadian standards, but to understand and enforce US standards too.
Dr. Sands is writing a book that will expand on his notion of “Educating Smart Borders,” looking at the history and future of Border Policy in North America. Trade Tips Blog will publish information about where to buy the book as soon as it is for sale. In the meantime, more of Dr. Sands work can be read on the website of the Hudson Institute.
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By: Elliott Smith and Jim Pettinger