Thank you very much, Mr. Chair.

Members of the committee, it's indeed a pleasure to be back in Ottawa and back in front of this committee and to see so many familiar faces and to see some new faces on the committee as well. I would like to join my colleagues in commending you for undertaking the study.

I imagine that every time you hold hearings, a witness says, this is the most important issue facing Canada today. Well, this is one of those cases, I think, in which the empirical data—the trade data, the numbers, our common history, the number of people we have back and forth, the sheer data—actually confirms the importance of the subject at which you're looking, yet it's one often overlooked in Canada. That which is closest to us, that which is easiest to us is often overlooked, and that bit of complacency has been one of the underlying themes, I think, of the Canada-North America, Canada-U.S., Canada-Mexico relationship.

That's not a criticism of the men and women in Foreign Affairs or the people on the committees and groups that work hard on the relationship. It's a commentary about the broader context of the relationship and the dangers of our success, enuring us to the work that must be done to maintain the advantages we have in North America.

So I commend the committee. With that I will start my testimony.

You will notice that I have remembered the most important lesson about testifying in front of parliamentary committees: bring your own coffee. I'm never sure whether the coffee here is free trade or not; that's the issue.

What I'd like to do today is offer a bit of a fill-in for what you've heard from my two distinguished colleagues.

My background in working on Canada-US, Canada-Mexico, Canada-North American relations goes back more than a decade, but the unique perspective I can add to this conversation is grounding it in the regional perspective and also talking about the importance of the forgotten third leg of the stool in North America: Mexico and the Canada-Mexico relationship.

I ran a Canada-Mexico binational working group with the Canadian Foundation for the Americas and the Mexican Council on Foreign Relations. Some of the recommendations—not recommendations, I would not be so bold—but some of the suggestions and ideas I have at the end of the presentation come from that earlier work.

What I'd like to do today is talk a little bit about the importance of the Canada-Mexico relationship from the regional perspective and about where we are, why we've gotten to where we are, and how this has resulted in the need for a new framework to think about what's possible in North America, and then offer some specific ideas for improving the relationship, for this NALS or North American leaders' summit in particular, and then for the 2017 North American leaders' summit. I think we really have to begin work now to prepare for the next opening we have to work on North America, and that will come in 2017.

Speaking first on the regional perspective, from travelling around western Canada I can safely tell you that there is a growing awareness or re-awareness of the importance of North America. This stems partially from our outreach across the Pacific to Asia. There is no doubt in anyone's mind in western Canada that Asia—China, India, Japan, Korea—has hugely important markets. Japan's has been for some time, but as we deal more with these markets that are more distant and more difficult, we're reminded of what we have right here on this side of the Pacific.

We have privileged access to the fattest, richest, and easiest market in the world in the United States. In Mexico we have a market that is now majority middle class, in which that middle class is growing, and an economy that is slated to be the world's ninth largest by 2030 and sixth largest by 2050. We have huge advantages that we really need to look after on this side of the Pacific.

The feeling in the west is that we need to give serious attention and consideration and apply resources to defending market share in the United States and to looking to gain market share in Mexico as opportunities in that country grow. For the west, for wheat, pulses, canola, even companies such as Palliser Furniture, there are opportunities for us in Mexico, and we in the west feel that we can grow as Mexico grows.

The motto of the Canada West Foundation is a strong west in a strong Canada, and I think we've reached the point nowadays at which we can add a strong Canada in a strong North America as key to our future prosperity.

Again, I would just note that for every western province, more than one-half of our exports go into North America, obviously for Alberta, Manitoba, but that's also the case today even in British Columbia, which we think of as more heavily dependent on trade with China. Still one-half of the exports from British Columbia are going into North America, so the market is hugely important.

There is also the growing worry about North America and where we are right now with America in the west. There is no doubt, if you pick up the newspaper, there is almost unanimous consensus among all the analysts working in North America that the relationship is not well, and even though that hasn't started to have an impact on our relationship with Mexico, it has in the relationship with the U.S. There are irritants for products crossing the border, in terms of the hit of $1 billion a year to our beef industry, which really has western ranchers worried about the ability to access this market that is so important as we struggle to get into markets that are, again, so much more difficult, like Korea and other markets in Asia. We really need to make sure we have access to North America, a market that has done so well for our prosperity in the past.

Again, there is too much to talk about here, but I would just note that the issues with North America and the problems with North America, I would say, actually started about seven years ago with the new administration in Washington, D.C. Several of us were concerned about the lack of attention and concern of the Obama administration to North America, particularly the dismissiveness toward the special relationship with Canada. This would need to be the subject of another committee hearing to go into details, but from personal experience, having been in Washington and talked with foreign policy advisers in rooms in which there were no Americans, no press, only Latin American business leaders, time and time again we heard the same sentiments you see on YouTube nowadays expressed about North America, about the relationships in North America, and about NAFTA, by the Obama administration.

I would say this administration has effectively killed the idea of a larger vision for North America. It is not just this administration but the continued opposition to NAFTA. If you want to try to kill a trade agreement with the U.S. like the transatlantic trade and investment partnership, the U.S. agreement with the European Union, the best way to do it is not just to associate it with NAFTA but to rhyme it with NAFTA, so instead of TTIP, the agreement is being called, by its critics in Washington, “TAFTA”.

That one anecdote tells you what you need to know about the status of larger ambitions for North America. Instead, we've arrived at an era of what I would call “small ball”. We need work on North America that goes beyond the day-to-day management of the relationship, on which the folks at DFATD do an admirable job, to the issue of the day, the issue of the week, of keeping the Canada-United States Regulatory Cooperation Council alive, which is, I would note, probably the single biggest issue for western Canada after, obviously, pipelines.

The RCC would rank, I would argue, as the most important issue in western Canada. In talking to provincial governments before coming out I was asked to stress that to the committee.

In an era of small ball, what can we do? Well, there are several ideas.

The first is an issue that concerns me particularly is our capacity in North America. Colin mentioned this briefly with the honorary consuls, but the truth is the last time I testified at the Mexican Congress, the joint session of the senate and the chamber, they brought in one Canadian, yet they were able to produce three Mexicans who specialize on Canada, who work in institutions—not universities but public policy institutions—where they are resourced and funded to work on Canada.

In the United States there are centres that have experts on Canada. But in Canada, if you want to find an expert on Canada-U.S. policy or on Canada-Mexico policy, someone who is not a retired diplomat but someone who is full time and funded, as Colin is, to work on Canada-U.S. policy, or if you want to find someone equivalent to work on Mexico, you should pick up the phone and dial area code 202 for Washington, D.C. Most of our capacity to work on Mexico is in Washington, D.C.

The U.S. is undergoing the largest demographic change in its history. We've completely almost missed this in Canada. We don't understand the current U.S. The majority in Mexico are now middle class. This happened without our really being fully aware of what this means. So number one is capacity in North America. It is critical that we get to not the same level as the United States, but please, the same level as Mexico is not asking too much.

The second is the Trans-Pacific Partnership. It's a well-known secret in Washington, D.C. that the Americans intend to have the TPP replace NAFTA. If this indeed is going to happen, we need to prepare for this. We need to think about this, think about the implications, start having conversations, and start looking ahead at what to do about this.

This is going to be the single largest issue, I think, to face Canada. We've complained of North America being a table for three. What happens when that becomes a table for 13? I toss Korea in because for all intents and purposes Korea has privileged access to both markets. We need to wrap our minds around this. Mexico would welcome that conversation. It's something with which they are equally concerned and there really is no other country on the planet with whom we can have this conversation other than Mexico. At this meeting I'm thinking we probably need to look at working with Mexico. This meeting of the NALS is a great time for the Prime Minister to pull the Mexican president aside and start having those conversations to look to repair our relationship.

For this NALS in particular, there are four things.

One is the trilateral trusted traveller initiative. It's absolutely crucial that we do sign the MOU at this upcoming meeting. The department needs to make sure that MOU is ready. This is a signal to Mexico that we are serious about North America, that we are back at the table. My sense, from my last trip to Mexico, was that Mexico has essentially given up on Canada. That is not in the sense of giving up on Canada forever but giving up on taking the initiative, trying to get Canada to be proactive, trying to get Canada to engage. We need to change that perception in Mexico. Things like working on the trusted traveller initiative can be a step in the right direction, but this can't be the end. This has to be the start. We can't wash our hands of it and say, “Good, we've done this. We're done.” This has to be the beginning of a broader conversation and movement.

Just as a side note, we've actually seen some research recently quantifying the cost of visas to trade and investment. We've always had information in the academic literature on the cost to tourism, but we've never really seen information on the impact on trade and investment. The journal Applied Geography has done a study recently showing that there's a 25% hit on trade and investment when visas are imposed in a bilateral relationship and a 19% hit when visas are unilaterally imposed in a trading relationship. We haven't been able to run the numbers in Canada, but you can imagine they're just as high.

The second idea is the North American Development Bank. This is something we had back with the Canada-Mexico initiative, years ago. But this is an idea that, again, would be welcome in Mexico, giving the bank a new mandate to work beyond the Mexico-U.S. border and to deal with issues that we have with the U.S.—bribing the Americans to complete the Detroit-Windsor bridge, getting them to complete the agreements in Beyond the Border. A North American infrastructure bank could leverage private sector money and give us another lever with the Americans to move them on the critical infrastructure issues that we face, and it would be a hugely important signal to Mexico.

I mentioned the RCC. Disaster response is another area where we should be able to work with our North American colleagues. Expand bilateral agreements; make them trilateral. After Hurricane Katrina, we sent a ship down to New Orleans. The Mexicans had troops massed on the border—and this time they were massed to actually come across to help, not to take back lost territory. But the Americans weren't prepared to take either one. If we want to re-energize the idea of North America, that we are something special, that we are distinct from the TPP, working on disaster relief should be an easy slam dunk. Each country has specialization and expertise, and it only makes sense to share that.

Finally, for the next NALS, look at the idea of broader energy cooperation. Here I'll toss out a truly crazy idea. Venezuela and Petrocaribe have fallen in the Americas. The countries of Carribean Central America are going to the U.S. for help to replace what they've lost in Venezuela. This could actually be a North American initiative. We can provide expertise in regulation, in energy efficiency. We can take the place in these countries to help secure markets for petroleum services countries, which are extremely interested.

Finally, North America is not just a job for the government. You will have many witnesses saying the government should do this, the government should set up a committee, and the government should fund. North America is a responsibility for all segments of Canadian society. The provinces have to be at the meeting in Colorado. The private sector has to step up and do more, in the case of Mexico.

This is being noticed in Mexico. It's being noticed in the United States, the lack of support by the Canadian private sector for the relationship with Mexico, and the silence on visas and other issues. It's not just the government that has to step up. It's all of Canada. We don't want Mexico giving up on us, and we certainly don't want the United States to do so either.

Thank you.

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