Stephen Harper Highlights BTB in Interview with Robert Rubin

From the Council on Foreign Relations A Conversation with Stephen Harper's Q&A session:

GORDON GIFFIN: So my -- really, my question is, is there a chance of a much bigger initiative between our two countries at some point, to break down the anachronistic rules that impede economic efficiencies in North America, some of which have been done in Europe? I'm not talking about creating an EU with a large governance or anything, but the economic efficiencies.

Last thing I'll say, when I was in Canada working on things like this, I found the impediment to that to be an insecurity in Canada about dealing with the United States, that we were somehow going to assimilate Canada. I don't see that anymore. I think Canada's much more self-confident in dealing with the United States and the world. So if that's the case, is there a chance at doing a bigger deal going forward?

HARPER: Well, Gordon, let me just begin by just repeating -- I know you're familiar with it -- some of the things we are doing, because I think we do have some significant initiative going forward.
We have the -- what we call the Beyond the Border Initiative where we are attempting through a series of individual initiatives and investments and closer cooperation between border authorities, to make things more seamless at the border and to push a lot of -- you know, inspections out around the perimeter of North America to try and arrange our affairs so that, as we say things, are -- things are -- you know, may enter twice, but are inspected only once. And we're doing some of those things.

We also have a parallel initiative called the Regulatory Cooperation Council, where we've identified 29 areas to create greater consistency and harmonization of regulations and more importantly, in my judgment, especially for our side, is to find ways in those areas where we will prevent regulatory -- unnecessary regulatory difference and duplication going forward, where we try and identify some of those things in advance, try and change some of the processes.

And I should mention one very specific project of international cooperation, which is the president just issued a permit for the Detroit River International Crossing, which this is financed largely by Canada, but this will be -- this is a huge piece of infrastructure in what is -- and we often forget the size of this relationship -- what is the largest single trade corridor in the entire world, the Detroit-Windsor trade corridor.
So we have some important initiatives going forward. Could they lead to something systemically more integrated? Look, I think on our side, they could. I think on our side, they could. I agree with your assessment. I think the view -- we had a watershed election in 1988 over the free trade agreement with the United States, and the opponents argued that whether economic integration with the United States -- greater economic integration and trade would lead to wealth or not, it would cause Canada to lose its political independence and identity.

What we've seen is it has led to vast increases in cross-border trade without any such loss of political independence or identity. In fact, this past year, as you know, we've been celebrating the War of -- the War of 1812, which --
RUBIN: I know. (Chuckles.)

HARPER: -- permanently established this -- (laughter) -- this independence and separate identity. So I think that -- there will always be opponents in Canada, but I think that is a real minority view now.

I think the resistance to this kind of thing's far more in the United States than in Canada, for reasons that -- and maybe, Bob and others, for reasons you would better fathom than me. 

Some of it's post-9/11 security concerns, but I've never seen -- the United States in the past decade is -- the sensitivity here about sovereignty and the negative assessments I often read of NAFTA -- completely counterfactual assessments of NAFTA -- I think, are the real barriers. I think the real barrier to making some of these arrangements broader and more systemic in terms of the integration are actually on this side of the border.

Canada-EU Stalled Trade Deal: Can the Tories Deliver on Free Trade?

Well, it was supposed to be done in 2012.

From today's The Globe and Mail:

The Harper government is pushing hard to secure a trade deal with the European Union before the Commons adjourns in June, an achievement the Conservatives sorely need to demonstrate they can ink ambitious accords that reduce Canada’s reliance on the United States.

Ottawa is in a race against the clock now that the European Union is turning its attention to a separate accord with the United States – a development that threatens to overshadow EU negotiations with Canada.

...

But time could be working against Canada. Ottawa’s long-delayed trade deal with South Korea stands as a reminder of what can go wrong when Canada fails to beat the United States to the punch. “The Canada-Korea free-trade deal was absolutely in the last stages and was completely set aside when Korea started to negotiate with the U.S.And the U.S. completed and Canada still languishes,” said Ted Haney, president of the Canadian Beef Exporting Federation.

The Tories are under pressure to deliver. Almost since taking office, they have talked of signing major trade agreements that diversify commerce away from the slow-growing United States but have so far failed to land one significant accord that would underpin what has become a major pillar of the Harper economic strategy. Negotiations with India and other big economies have also made little progress.

Another issue that may be a sticking point:  European bans on fracking could be challenged under a Canada-EU free trade pact.

Will U.S. Energy Greening Stiff Canada? If It Does, U.S. Will Alienate an Ally and Probably Just Promote Self-Defeating Green Policies

By Keith Edmund White

Editor-in-Chief

When we think of Canadian energy, Keystone XL reigns supreme.  But did you know about the abundant hydropower the U.S. gets (and could get more of) from Canada?  In short, efforts to find sustainable 'green' energy alternatives are great.  But stiffing Canada in the process only alienates a partner and makes it more likely that government subsidies or other protections to green projects won't work on the global marketplace.

“Even green protectionism is protectionism nonetheless.” - Jim Prentice, former Conservative cabinet member, 2006-10 (Minister of Industry, Environment, and Indian Affairs and Northern Development)

Most Americans sympathetic to protective trade practices usually think of combating low-cost Chinese goods, not blocking our lucrative crossborder trade with Canada.

And most Americans concerned about the environment, wouldn't think that 'greening' the United States means protective trade practices.

But Jim Prentice, former Conservative three-time cabinet official from 2006-10 and now CIBC Vice President, reminded a Halifax audience of three important developments:

• North America is on the verge of being energy independent
• How the United States goes about promoting green energy could essentially lead to U.S. energy protectionism that directly affects Canada
• Canada's energy sector will rejuvenate Canada's Atlantic provinces.

From The Globe & Mail: 

“If we play our cards right, there will be profound opportunities for Atlantic Canada and for our country as a whole,” he told the Maritimes Energy Association in Halifax, according to a text of his speech.

But he said Canadians can’t take access to the U.S. market for granted.

Rather, Prentice warned that they should be vigilant about signs of protectionism coming in the form of low carbon fuel standards or regional requirements to use specific amounts of renewable energy.

“Canada must continue to fight for a continental energy marketplace that is free of national and sub-national impediments. Interventions by government, while well meaning, are nevertheless potentially damaging and counter-productive,” he said.

In short, Canada offers the United States a rich and diverse set of energy. And, frankly, both countries should to looking at a regional--not national--approach to energy.

Why? Well, because we share rich deposits of natural gas and oil along our shared border. And hydropower already links of nations.

But there's also this:  Shorting our critical energy player who can already provide abundant high and low-carbon energy sources to prop up U.S. energy production is likely to not even make the U.S. more 'green' in the long-term   

Instead, 'green' U.S. policies should incorporate the dynamics of its Canadian partner, so that both nations can focus their resources in ways that benefit both--and lead to lasting energy providers in both nations that can compete internationally.  The other option, making U.S. green energy policy in a vacuum--and ignoring the rich energy we can get from Canadian oil and hydropower--just means the policies the U.S. support just won't be the best fit for North America, or match the business dynamics of the global energy marketplace.

In short, the United States should ensure that it continues to use Canada as a partner to promote sustainable energy solutions.   The other option not only alienates a critical ally, but also makes it less likely that U.S. green initiatives will stick in the long-term. 

Is the Keystone XL Pipeline Irrelevant?

Will building Keystone only save $5 a barrel or oil?

According to a State Department report, rail (or rail/tanker combo) is a viable alternative to Keystone XL.

From the Washington Post's Brad Plumer:

There are also the economics to consider. The State Department report estimates that shipping Alberta’s heavy crude by pipeline costs about $10 per barrel, with rail in the $15 to $18 per barrel range. Yet some producers are telling Reuters that shipping by train to the Gulf Coast could cost as much as $30 per barrel.

Now, even at those higher prices, shipping tar sands by rail can still be viable — it all just depends on the demand for oil and available alternatives. Here’s one illustrative example: In March, refiners in Texas could buy Mexico’s Mayan heavy crude for around $106 per barrel. Meanwhile, Canadian heavy crude was selling for about $83 per barrel up north. At those prices, for tar-sands product to be competitive down in the Gulf Coast, transport costs would need to stay under $23 per barrel. Not impossible, but harder without a pipeline.

Unfortunately, there’s no easy way to predict what will happen. If the White House does block Keystone XL, that will certainly make life more difficult for tar-sands producers at the margins. There’s a reason why Canada’s oil industry strongly supports this $5.3 billion pipeline project. But it’s impossible to say for sure that the industry won’t find a way to bring that extra oil to market — especially since the rewards are so lucrative.

“There’s no test case,” writes Schor. “Either Keystone XL will get approved or it won’t.” And how you think about this question goes a long way toward how you think about the environmental impact of the Keystone pipeline.

What I find most interesting is the selective cost and environmental comparisons of Keystone XL pipeline pathway alternatives and "no action" (i.e. no pipeline alternatives .  

But instead of summarizing, how about I just give you this link to the whole report, and show the "no action" alternative report section below:

Colin Robertson Urges Canada to Embrace "Digital-Age Diplomacy" Towards U.S.

By Keith Edmund White

Editor-in-Chief

Can Canada magnify its influence in the United States through Blackberries, not consulates?

Colin Robertson uses the dust-up over a proposed U.S. government study on a new border fee to urge a revamp of Canada's U.S. diplomatic strategy.

Or as he puts it, "wage a permanent campaign in the United States on behalf of Canadian interests."

But how? In the face of tightening budgets, Canada has cut its consulate offices, the traditional way foreign offices advocate for their foreign policy interests and build strong bilateral ties.

Robertson's answer: ditch the office, take the blackberry.  From his The Globe and Mail editorial, whose title regrettably distracts from Robertson's main argument:

The lesson we can draw from both the DHS kerfuffle and the bridge saga is that we need to wage a permanent campaign in the United States on behalf of Canadian interests.

We need a thousand points of contact to complement our embassy and our consulates. This means taking our game to the States because by the time a problem reaches Congress we are fire-fighting.

Recent budget paring in Canada has reduced our consulates in the United States to fifteen. Yet, what we need is representation in every state. We can do it, within budget, by doing diplomacy differently.

Recruit talent from the Canadian expatriates who are already living in each state. Let them practice digital-age diplomacy. Drop the black tie for a BlackBerry and a working knowledge of new media.

With some exceptions – our embassy’s prime location on Pennsylvania Avenue is crucial, and the Los Angeles consul-general’s residence is a second home for Canada’s entertainment industry – these diplomats can work from their homes or incubator offices to spot opportunities for trade and investment.

[Note: I suspect many of these digital diplomats--Canadian or not--will be opting for iPhones over Blackberries.]

I think Robertson's editorial starts a good discussion for all world capitals on how nations can assert their interests in the 21st century. Dispatching staff to various locations, assuming that plane fare and gas reimbursements don't eat away at office savings, does seem to make sense whether its foreign subnational governments, small and medium-sized business, or ex-patriots a point of contact.

And going with Canadian expatriates makes sense as well.

But, as a biased American citizen, I would be remiss if I didn't stress the advantages of enlisting Americans in  any future Canadian digital diplomacy.

DHS Budget: White House Proposes Overall Cut, Biggest Surprise Loser? Coast Guard

So the White House's budget calls for overall cuts to DHS.  But will Congress stick with them?

By Keith Edmund White

Editor in Chief

Mickey McCarter does an excellent job rounding out the White House's budget--something I had hoped to do in more detail, but after two weeks I'm throwing in the towel.

But, keep in mind, that it was Congress that actually kept FY13 spending level at FY12 levels, shielding DHS from sequester.

And with the recent events in Boston, I will not be surprised if attempts to bolster homeland security spending don't find bipartisan support in Congress.  (Note:  Just look at the Massachusetts Democratic primary for John Kerry's former Senate seat.)

Yet, that makes a big assumption:  that Congress will actually pass a FY14 budget, and not punt through continuing resolutions--a move which may or may not affect current agency spending levels. 

Oh, and then there's sequestration.

From McCarter's article on the overall budget:

The White House Wednesday unveiled its fiscal year 2014 budget proposal for the Department of Homeland Security (DHS) and other federal agencies, calling for $39 billion in discretionary funds for DHS, a reduction in its overall budget.


In a separate proposal pursuant to the Budget Control Act of 2011, the Disaster Relief Fund would receive $5.6 billion.

The administration compared the overall proposed numbers to enacted levels in FY 2012 as it did not have final numbers for FY 2013, which only were decided on at the time of the signing of a FY 2013 consolidated spending bill on March 26. As compared to final FY 2012 levels, DHS discretionary spending would be down 2 percent in the budget proposal.

...

According to the Homeland Security 2014 Budget in Brief, most DHS agencies would experience budget cuts of five to eight percent, which is in addition to the sequester imposed on the department -- should the sequester continue.

And his article focusing on the tough decisions Napolitano is asking Congress to make:

The increase in spending at the DHS S&T Directorate would go toward fully funding the construction of the National Bio and Agro-Defense Facility (NBAF) in Manhattan, Kan., Napolitano said.

The facility is necessary to replace the failing Plum Island Animal Disease Center, which soon will not be able to support national requirements to defend against threats posed by biological agents, Napolitano said.

"This innovative federal-state partnership will support the first Bio Level 4 lab facility of its kind, a state-of-the-art bio-containment facility for the study of foreign animal and emerging zoonotic diseases that is central to the protection of the nation's food supply as well as our national and economic security," Napolitano said in her testimony.

The state of Kansas already has put up $320 million to build the center, Napolitano said. DHS must respond with its portion of the funding, totaling $714 million.

"At some point, we have to bite the bullet," Napolitano said of finishing NBAF construction.

The Buddy-less Study? Proposal to Study a Possible U.S. Border Fee Gets Another Opponent

Keith White on growing Congressional opposition to a White House proposal to study the impact of adding a new crossborder fee.

By Keith Edmund White

Editor-in-Chief

Bill Owens (D-NY) has pledged to "explore all legislative options" to prevent a proposed DHS study on the "feasibility and cost" of a new border fee at northern and southwestern U.S. border crossings.

Who thought a boilerplate study would generate such buzz?

But when the study relates to slapping a new fee on crossborder travel between the United States and Canada, pushback is to be expected.