35 Ways to Improve North American Competitiveness | Wilson Center
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35 Ways to Improve North American Competitiveness

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35 Ways to Improve North American Competitiveness

The Takeaways:

1. North American collaboration is critical to the region’s future global competitiveness. However, rather than taking a single approach, the core operating principle should be subsidiarity—doing what makes sense at the level it makes sense.

2. Infrastructure is key to North American competitiveness. Existing infrastructure should be reassessed and updated to increase efficiency; the approval process for new infrastructure should be streamlined; and new means to finance it should be identified.

3. North America needs to identify and expand opportunities for trilateralism.  Existing agreements amongst the United States, Canada, and Mexico have yielded important benefits, but there are still many more opportunities at trilateral level. Critical to this expansion are both trust and information sharing.

Congressman Bill Owens opened by pointing out that his district, situated along the U.S. border with Quebec and Ontario, conducts bilateral trade and regularly moves many people across the border. In order to improve trade with the United States’ largest trading partner, Owens urged the implementation of both the Beyond the Border agreements as well as the Regulatory Cooperation Council’s Joint Action Plan. Owens added that it is imperative that the United States “do right by infrastructure,” which he feels has been a struggle over the past ten years. Furthermore, he calls for Americans to become better educated about the United States’ relationship with Canada, as most Americans are not aware that Canada is its largest trading partner. This lack of awareness, he believes, is preventing investment in intellectual and financial capital that could be beneficial to both countries.

Though the future of North America is bright, Canadian Council of Chief Executive’s Eric Miller believes that, it requires an evolution in its architecture and approach if it is going to compete with Asia and Europe. To accomplish this, Miller and his colleagues took on the challenge of rethinking the North American relationship. He explained that their core operating principle is subsidiarity—“doing what makes sense at the level it makes sense.” He pointed out that while Canada and the United States already have huge bilateral trade and investment linkages, there are also some core trilateral issues. Simultaneously, there are also regional elements that would be illogical to address at the trilateral level.  Miller pointed out that, previously, when the three countries attempted to address everything trilaterally through the Security and Prosperity Partnership, it proved infeasible both politically and operationally.

The goal of the report is to develop meaningful, actionable deliverables that will make a difference in North American competitiveness. These recommendations can be divided into eight broad areas: supply chain and border management, infrastructure, manufacturing, energy, regulatory cooperation, trade, jobs and skills, and cooperation on pandemics and cybersecurity.

A general overview of some of the report’s main recommendations in each of these areas:

1.       Supply Chain and Border Management: Miller argued for dynamic public-private cooperation that would leverage big data to understand supply chains. Sharing real time information on supply chains would not only result in productivity gains for companies, but would also exempt them from fines. Additionally, North America should utilize a common set of data elements in order to allow its member countries to share information and risk assessments. Lastly, Miller advocated for harmonizing the Trusted Trader Program by linking the agreements among the United States, Canada, and Mexico, as well as developing a Custom Self-Assessment that exempts trusted traders from having to make a declaration every time they import something. By reducing the paperwork for high-volume traders, customs officers are freed up to do more meaningful work.

2.       Infrastructure: Miller emphasized the need for more infrastructure along the border coupled with finding new means to finance construction. While infrastructure is traditionally paid for by appropriations, North America should convene its experts to develop new means of bringing financing to the border such as public-private partnerships. Miller also suggested transforming the North American Development Bank into an infrastructure bank. Lastly, there is a need to make border crossings more efficient by reassessing flow patterns across the border.

3.       Manufacturing: Miller lamented the added cost resulting from parts having to undergo repeated inspections as they cross the border. The automotive industry provides an example: parts cross the border about seven times before a car is fully assembled, requiring inspection each time. The cost of these added inspections is about $800 for every car assembled in North American. In contrast, cars imported from Korea only have to pass one inspection as they enter North America. Improving the efficiency of this process is therefore critical to keeping North American manufacturing competitive.

4.       Energy: In light of the North American energy revolution, Miller stressed the need to identify synergies where Canada, the United States, and Mexico can work together. To begin, there is a need for more information. While the U.S. Quadrennial Energy Review is an excellent resource, Miller suggested developing a North American version in order to create a baseline of information. Furthermore, more investment in renewable energy is needed, as is technological innovation that requires collaboration amongst private companies with a strategy to disseminate it. Miller encouraged energy regulator collaboration to streamline the approval process for cross-border infrastructure. Lastly, Miller encouraged North America to cooperate on climate change, which will require active engagement with the environmental community.

5.       Regulatory Cooperation: While regulatory cooperation between Canada and the United States is already very good, Miller encourages experimentation with trilateral cooperation. Successful trilateral regulatory cooperation ultimately is about trust, meaning regulators need to convene to ensure they hold both a shared vision and priorities. Additionally, Miller argued for a mechanism to allow private companies to petition the government about specific regulations that are causing them problems. In response, governments ought to align regulations or else be able to explain why it is not possible. Though there are often legitimate reasons why regulatory alignment is not feasible, governments should provide an explanation of those reasons.

6.       Trade: In negotiations such as the TPP, there needs to be information sharing among the North American countries about each other’s bilateral talks with other countries. Of particular importance for highly integrated industries, such as the automotive industry where changes in one country inevitably affect the others, information sharing is critical to ensure no disruptions in the supply chain.

7.       Jobs and Skills: Miller urged for the development of common ways to understand professional accreditation and the alignment of job descriptions in order to make it easier for professionals moving across the border to receive recognition for their accreditation. Miller also noted the need to streamline the application process for training sessions as well as to update the NAFTA professionals list, which was negotiated in 1991 and therefore reflects the pre-internet jobs market.

8.       Cooperation on Pandemics and Cybersecurity: Although there is a lot of good work being done nationally, these efforts should be connected trilaterally. Additionally, Miller noted that the effectiveness of the Canada-U.S. border depends on the functionality of the U.S.-Mexico border. This, in turn, depends on fixing Mexico’s border with Central America.

Speakers:

Eric Miller, Vice President for Policy, Innovation and Competitiveness, Canadian Council of Chief Executives

Congressman Bill Owens (D-NY), Chair of the Northern Border Caucus