New study proposes 'strategic bargain' with U.S.

By SHAWN MCCARTHY PARLIAMENTARY BUREAU CHIEF
Tuesday, April 16, 2002

OTTAWA -- The Canadian government needs to negotiate a new "strategic
bargain" with the United States that would increase economic and security
integration and ensure Canadian access to U.S. markets, says a new study by
the C. D. Howe Institute.

Without some overarching agreement, Canadian interests are likely to get
short shrift in the United States, where politicians are increasingly
focused only on security issues, says the study by prominent University of
Toronto economist Wendy Dobson.

"What we require are large initiatives that address U.S. objectives at the
same time that they open new economic opportunities," Ms. Dobson writes in
the report to be released today.

"A major strategic bargain would afford the opportunity to advance a vision
of North American economic security and to obtain linkages that would be out
of reach if we proceed on a piecemeal basis."

The C.D. Howe Institute -- a business-financed think tank -- is launching a
series of papers on North American integration, driven by the assumption
that improving Canadians' standard of living depends on closer economic ties
with the United States.

The Liberal government is currently working with the Americans on a series
of fronts, including border security, immigration controls, energy security
and trade irritants such as the softwood-lumber duties imposed by Washington
on Canadian producers. But for the most part, these negotiations occur on an
ad hoc basis -- co-operation on border security, for example, has little
relation to softwood talks.

Ms. Dobson said the Liberal government should instead propose a sweeping new
agreement that would deal with U.S. interests in security and energy, and
Canadian desires for ensured access to American markets.

To some degree, that would mean moving toward a customs union in which both
countries would treat goods from outside North America the same, but would
not hammer one another with trade laws. It would also mean deepening the
provisions in the North American free trade agreement that allow for the
free movement of people across the border.

In return, Canada would increase its co-operation with the Americans in the
energy sector. And it would ensure its immigration, defence and antiterrorst
policies satisfy American concerns about potential terrorist attacks.

Ms. Dobson conceded some Canadians would be concerned about a loss of
sovereignty under such an arrangement.

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