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Creating a North American Community: Chairmen’s Press Briefing for an Independent Task Force on the Future of North America

Chair: Pedro Aspe, Task Force chair; former finance minister, Mexico
Vice Chair: Thomas D’Aquino, Task Force vice chair; chief executive, Canadian Council of Chief Executives
Chair: John Manley, Task Force chair; former deputy prime minister and minister of finance, Canada
Vice Chairs: Robert A. Pastor, Task Force vice chair; vice president of international affairs, American University, and Andres Rozental, Task Force vice chair; president, Mexican Council on Foreign Relations
Chair: William F. Weld, Task Force chair; former governor of Massachusetts and assistant U.S. attorney general
Presider: Carla A. Hills, chairman and chief executive officer, Hills & Company; former U.S. trade representative
March 14, 2005
Council on Foreign Relations


CARLA HILLS: This is billed as an informal session. That means it translates to you may eat and talk at the same time. I'm very privileged to be in the midst of our three chairs and three vice chairs on the dais. We thought that this smaller group would appreciate an opportunity to have an informal dialogue.

Let me just briefly, because you know these distinguished gentlemen who are all splendid public servants, just mention their names: to my left is John Manley, former deputy prime minister and finance minister of Canada; to my right, Pedro Aspe, former finance minister of Mexico; and to my second left is William Weld, former governor of the great state of Massachusetts. And our vice chairs: Tom d'Aquino is to my right, and Tom is CEO [chief executive officer] of the Canadian Council of CEOs; Andre ROZENTAL is to my far left, and he is president of the Mexico's Council of Foreign Relations; and at my far right is Bob Pastor, director of the Center of North American Studies at American University. And I also want to acknowledge the hard work done by others in the room. We have Nelson Cunningham [of Kissinger McLarty Associates] here, and we thank you. A member of the Task Force, [Council U.S. Foreign Policy Senior Fellow] Lee Feinstein, who has been our leader, and [Massachusetts Institute of Technology Associate Professor] Chappell Lawson.

I only have a few remarks. Let me just say that one week from Wednesday, on March 23rd, [Canadian] Prime Minister [Paul] Martin and Presidents Bush and [Mexican President Vicente] Fox will meet in Texas. And this summit provides them with an outstanding opportunity for the leaders to reinvigorate a relationship that is so vital to all three of our nations. Canada and Mexico are our largest trading partners and also our major energy suppliers. Canada has long been an ally on defense issues and all three nations face common security challenges to protect the North American continent from terrorism.

For these reasons, last fall the Council of Foreign Relations, together with the Mexican Council of Foreign Relations and the Canadian Council of CEOs, launched a Task Force on the future of North America to examine our trilateral relationship and to suggest opportunities for deeper collaboration. The Task Force has held three meetings: one in Toronto, one in New York, and one in Monterey, Mexico. Its report will be released later this spring. But to take advantage of the March 23 summit, the six chairs have agreed, after consulting with Task Force members, to issue a chairmen's statement. They want it made clear that this statement is theirs and theirs alone, and does not purport to express the views of Task Force members. That will come later with the Task Force report on the future of North America. I have huge admiration for all six of these gentlemen and congratulate them warmly for putting out this statement more than a month before they contemplated that the report would be completed.

And I thought that you would benefit from a few remarks from each of our three chairs. The vice chairs are here to answer your questions, but just to have the maximum time, we started promptly at 11:30. We're going to close promptly at 12:30. I want you to have all the time possible to ask your questions. So let me turn it over to Minister Manley. And two things I know that I don't have to tell you, to turn off your cell phones, beepers, and that kind of thing. And, of course, since this is for the press, it is on the record. So John?

JOHN MANLEY: Thank you very much, Carla. I must say I'm a great admirer of the U.S. practice of allowing people to retain their titles. It just feels so familiar, as long as you don't have to retain the responsibilities as well.

Let me deal with part of our statement which particularly focuses on security. And my colleagues will pick up other aspects of what we've tried to say today, and then we'll follow up with discussion as you see fit. Clearly, what we're trying to say in the context of the security element of this report is that the security of North America is indivisible; that it's not possible for us to envisage a situation which governments fulfill their primary responsibility to their people, which is their personal safety and that of their property, without a high degree of cooperation among governments and among security and police and military forces. That was certainly brought home clearly on 9/11 and in the aftermath of 9/11, but with some events that had occurred prior to that.

It's always important, I find, to recall that the terrorists who acted on 9/11 did not enter from either Mexico or Canada. They came directly into the United States from abroad. But nevertheless, and this came to my mind on that day when I was returning to Canada from Europe by plane when the crashes happened, the first thing on my mind was the events of late 1999 when an individual named Ahmed Ressam was somewhat fortuitously apprehended entering the United States from Canada with the knowledge and with the ability to cause havoc at the Los Angeles Airport, which was his intention at that time. So that really looking at the events of 9/11 and its aftermath, recalling that al Qaeda has listed Canada as one of its targets, and not just dealing with terrorism, but looking at the effect of international criminal conspiracies, I think it's fair to conclude that security requires a multinational approach and a great deal of cooperation. That's really what we're saying in our report.

We have had a lot of changes since 9/11 in the context of the smart border accords first between Canada and the U.S.; soon after that between Mexico and the United States. We've really said in this report that we see moving beyond the smart border agreement, building on the context of them, facilitating the ease of crossing the border by those who are not a security risk, enhancing the existing programming that we have with Canada and the U.S. called Nexus, that would see the creation of a North American border pass with biometric identification that would facilitate the ease of crossing the border. That has— in addition to the benefits that that approved of those who have access to using it, it means that the resources that are deployed at borders to deal with security issues can be focused on those individuals or entities that might be of greater risk from a security point of view.

We've also talked about in our statement, and I think [inaudible], although I don't want to prejudge the other 24 members of our Task Force who have a variety of opinions, which they hold very strongly, I think that we have a broad consensus building around taking additional steps to harmonize visa and asylum regulations, looking at a great deal more data-sharing with respect to entry and exit, a joint inspection of container traffic entering North America. I think this is something that in our time working together Secretary Ridge and I had identified as one of our key vulnerabilities when we were capable at that point of inspecting as little as 2 [percent] or 3 percent of container traffic entering North America. But that could be a significant vulnerability. We made progress on joint inspection, including joint inspection at foreign-source ports in Europe and potentially Hong Kong, as well as a common approach to international negotiations related to the global movement of people, cargo, and vessels.

We talk about deeper cooperation, both law enforcement and defense, including particularly broadening the current arrangements that Canada and United States enjoy under NORAD [North American Aerospace Defense Command] for common air defense to look at common marine defense measures as well, a higher degree of cooperation and integration, therefore dealing with the defense of North America. And we've opened the door to greater military cooperation on a trilateral basis, including with Mexico.

We have made a brief statement with respect to energy security, highlighting the fact that Canada and Mexico are the two largest sources of imported oil to the United States. Canada is the source of 94 percent of imported natural gas to the United States and 100 percent of all electricity imports to the United States, although electricity flows both ways between Canada and the United States.

There is no question that there is a growing demand for energy and other natural resources, and it doesn't need to be pointed out, I'm sure, that the very rapid growth of the Chinese economy has accounted for a great deal of this demand, and we're suggesting that that and other international developments suggest that we ought to be looking to a North American energy strategy that takes account not only of the energy requirements of our common North American community, but also takes account of other natural resource availability and other requirements that we're going to have. That means that we need to look at the security of our infrastructure with respect to supply of energy. And when we're talking about security, we're not just talking, I don't think, about what the public may commonly perceive as security risks— blowing up of pipelines or severing of electricity transmissions— but also the very important element of cyber security, which creates a vulnerability with respect not only to energy resources, but to other control mechanisms and devices in North America. So cooperation in those areas becomes a vitally important element.

And I think, finally, and I'll just conclude with this before passing it on to my colleagues, I think what we've really tried to say overall is that this is an opportunity for the three leaders of North American governments to build on a vision of the future, to try to capture what the architecture of a North American community in the 21st century in which China and India are becoming major economic and perhaps military players; in which Europe has coalesced around 25 members, a common currency, and little, if any, border controls internally. It's time for us to build the architecture of the future and to try to foresee a vision of what North America may look like in 2010 and the years beyond.

HILLS: Thank you, John. Pedro?

PEDRO ASPE: Thank you, Carla. Just a few comments. It's important to remember when NAFTA [North American Free Trade Agreement] was signed what were the objectives of the time of the signing. And there were basically three. One was to increase trade. The second one was to increase investments, and the third one to defend intellectual property rights. If we look at precisely each of these things that have happened in the last 10 years, we see that the trade more than doubled. In the case of Mexico, investment tripled and the intellectual property rights were dearly defended. So in that sense, we accomplished a lot of the particular, specific objectives that we were set to achieve.

In the meantime, these 11 years a lot of things have happened in the world. The European Union has been extended to 25 countries. Of course, the appearance of China as a major economic power and India [inaudible] that a lot of things are happening, and we have to update— to enhance our relationship, and we go into that area in the report.

First, for instance, we propose the creation of a common external tariff. And the way to do that will be industry by industry taking the lowest possible tariff as the benchmark to advance. And we think this is very important, because the rules of origin, which were extremely important 10 years ago, are not so much important today. And that will also free a lot of— I mean, it will help like [inaudible] for the borders to enhance trade.

Finally, one comment on some sectors that were not covered by NAFTA. There are some sectors that were not covered by NAFTA and had been lagging on productivity gains. And clearly in my country, in Mexico, the most obvious one is energy where our productivity levels lag way, way behind Canadian and the U.S. standards. On average for oil, we are lagging one eighth of the productivity levels in— with respect to our two neighbors. So we clearly have to modernize them and to enhance the competitiveness. And this will take a gathering of consensus at home and to propose new, bold policies in terms of energy, in terms of the fiscal reform that our country needs. And these will, of course, will enhance the competitiveness of Mexico and of the region.

So we think that after 11 years we have to update this thing and to make really long-term proposals. Some of them will not be achieved in one year or two, but I think that— I remember very well 11 or 12 years ago when people would say, “How can a less-developed country like Mexico enter into a free trade agreement?” Well, we have shown that we could do it and that we have increased trade a lot by doing that. And I think we are now at the beginning stage where we have to see this new vision. Thank you.

HILLS: Thank you, Pedro. Bill?

WILLIAM WELD: My own view is that, you know, the general idea of this Task Force is that it would be a handy idea for our three countries to become knit more closely together, and my view is that this should not be tremendously difficult. We're three liberal democracies; we're adjacent; we're already intertwined economically; we have a great deal in common historically; culturally, we have a lot to learn from one another.

And speaking of learning, one of the pieces of low-hanging fruit I think that we could avail ourselves of to promote this process of knitting would be to dramatically increase the amount of educational exchanges among our three countries. Last fall, Mexico and Canada accounted for 2 percent and 5 percent of the students studying at American universities respectively. Together, they were 45,000 students, I think, which is very much less than South Korea at 80,000, India, China, Japan between 60,000 and 80,000. And whether it's an expansion of the Fulbright [Scholar] Program or new exchange programs, we think this will be a great idea at both the secondary and university level. It really—those of you who, like myself, have studied abroad know that it can be a life-changing experience. We think there should be teacher exchange programs at both the secondary and university level. We think there should be centers for the studies— for North American studies in all three countries who could perhaps help to administer the increased scholarship and exchange programs, but that's point A.

Point B, as I look at the process of further knitting, there are areas in all three countries, but particularly in some of the southern parts of Mexico, that have not participated fully in the economic advances and increased economic development that have been— that have followed on the adoption of the free trade agreement. And there's a consensus among us here that— of course, as Minister Aspe mentioned, that Mexico is going to develop policies of its own to attract investment. But we do think that in conjunction with that, that the U.S. and Canada as good neighbors could be of some support in establishing a development fund, a North American development fund to help to knit the less developed parts of Mexico with the markets in the north. There are parts of Mexico that have not participated in the advances since NAFTA as much as the areas nearer to the border. And, you know, that lack of uniformity, perhaps it's a little strong to say it's a cause of instability, but certainly it's not desirable in an area where we seek to spread the benefits of prosperity among our three countries.

We could do worse than to look at the model suggested by U.S. Senator John Cornyn of Texas [R] in his proposed legislation to create a North American development fund. In addition to the fund itself, relatively small amounts of grant money to Mexican states and municipalities could perhaps be helpful in making them and projects in their borders more market-worthy to access private capital markets that are willing to finance long-term liabilities. There's a lot of 30-year paper out there, long-term assets looking for long-term liabilities. And to make that match, you just need a certain amount of technical assistance.

The final point I would mention is that, in order to underline the process of this knitting together, we do think it would be a good idea if the leaders in Texas declared their intention to have these summits be annual affairs. Nothing so succinctly reminds every official in the government to keep working on the project than the fact that the leaders are going to have another meeting within a year. We propose the creation of what we call a North American advisory council. You could call it anything. It would be eminent citizens from all three countries, probably appointed by the governments, but independent of them, who would help to prepare the ground for this. Help, not dictate. Help to prepare the agenda for the summits and to follow through on the decisions reached at the summit. So that's my soft-power briefing, as it were.

HILLS: Thank you, Governor. Now the floor is open. Yes, sir. Now, I would like you to state your name, your affiliation, and to whom you're addressing the question, if you have it directed in that fashion.

QUESTIONER: Okay. This is— Steve Handelman,Time magazine. This is to all three co-chairs, really. You're calling for a greater collaboration on the part of all three governments at a time when it seems that all three governments have never been more divergent in their approaches, both to economic policy-making, straight politics, or whatever the list of quarrels, and issues between the three countries or among the three countries— it never seems to have been greater than at the present time, whether you talk about ballistic missile defense with Canada and the U.S., trade disputes, trade issues which seem to be building. How can you make your report palatable to the— all three leaders? How will this work or this to some extent wishful thinking on you part?

HILLS: Who wants to take the first crack at that? Bob?

ROBERT PASTOR: Bill grabs the microphone and sticks it in my face. Well, you know, Steve, if— I guess if the three governments were converging, maybe you would say that the report would be redundant. We think that this is a very crucial juncture in terms of what's happening internationally, whether you look to Asia or whether you look to Europe, and there is not a more appropriate time for us to be calling for a vision of a North American community and asking governments to deal with the future of North America than right now.

The rest of the world is not sitting back and waiting for North America to plan its course. Europeans have been moving very diligently with— over the last decade with significant change. We've seen China emerge. We're seeing India emerge as a major economic force. And I guess what we're really asking leaders to do is not to just be bogged down in today's details about this trade dispute or that issue, but to look at the architecture of the future, and to ask their populations to think about where we can go as a community going forward.

HILLS: Pedro, do you want to add to that?

ASPE: Yeah, I would just say that I think proposals like the common external tariff are very appropriate exactly because of this. Everybody's moving. We are— we haven't— bring new things in the last years, and we have to update our agreements, which, of course, the marginal returns are coming down. And we need to have this vision. Now, on the other area of the— we have certain sectors which are— were either untouched or marginally touched at the time, and which we need to revise if we could see now trades on those sectors that were left behind, too.

HILLS: Bill, do you want to add to that?

WELD: I wouldn't lose too much sleep over the missile defense issue. I mean, the fact that one country decides to invest in a weapons system and another country isn't so sure about that doesn't have all that much to do with the architecture of common defense that's characterized the Canada-U.S. relationship for decades. NORAD is already our eyes and ears on missile defense, and there are other issues that are far more toxic to— in my view, anyway, that are more burrs under the saddle. Softwood lumber, for example, has been an irritant to a whole generation of people involved in trade. But if there's one thing that political leaders should be good at and are good at is not being distracted by the one piece of questionable news on the horizon, but focusing on the potential and the art of the possible. And that's what we're hoping these three leaders are going to do in Crawford, Texas.

HILLS: Our vice chairs would like to say a word. Andre, you had something?

ANDRES ROZENTAL: Perhaps just to dispute Steve's affirmation that things have never been worse. I would dispute it at least in terms of how the U.S. and Mexico are dealing with many of the issues on the bilateral agenda, especially security issues and cooperation against criminal activities, narco-trafficking, and so on has never been better, and what this report really does is to build on that. But more generally, a report such as this and the work of the Task Force is really to push the agenda and to be out in front and not behind what the governments are doing and what— or what policy-makers are doing.

I think the whole idea is to set up a policy agenda for the future between now and the year 2010. And in that sense, it has to be bold. It has to be out of the box, and it has to be considerably different from what the realities of the day-to-day relationship are.


THOMAS D'AQUINO: Carla, Steve, you know, I think we can all also learn lessons from the history. If you go back to the 1980s, the divergence of opinion between Americans and Canadians and, as you know, from the hard, very, very heavily contested free trade debate leading up to the election of 1988 showed that there were, in fact— that election showed that, in fact, there were huge divisions of opinions. So if you say is there a time when, you know, there were greater difficulties, I would say that the lack of convergence at that time was far greater than in fact it is today. The second thing I would say is that remember Ronald Reagan— President Reagan did request of [Canadian] Prime Minister [Brian] Mulroney participation of the Strategic Defense Initiative, the space initiative, and the prime minister of the cabinet said we couldn't do it. Within weeks of that, the two leaders were engaged in preliminary discussions about free trade, so I don't accept the fact that we are further apart at the present time. In fact, I think there's a high degree of convergence on many fronts driven by the huge challenge to North America coming from— particularly from Asia, and the post-9/11 world we're living in.

MODERATOR : Thank you, Tom.

Next question. Yes, sir.

QUESTIONER: David Halton, Canadian Broadcasting Corporation. What are the consequences of sticking with the status quo? I can't speak for Mexico, but talking to civil servants in the U.S. and Canada, there seems to be an ingrained kind of reluctance to move ahead with some big, visionary approaches. They keep on talking about, you know, incremental small steps and so on. Do these guys have their heads buried in the sand?

HILLS: To whom are you addressing the question?

QUESTIONER: Well, everyone and anyone.

WELD: I thought he said Weld. [Laughter]

HILLS: Well, we'll start with Bill.

WELD: No, I would say absolutely heads in the sand. I mean, the bureaucratic approach is precisely the wrong approach and, you know, it reminds me of the old saw that the lower the stakes the more vicious the infighting. These people are going to resist to the last drop of their blood because they're dealing within a very narrow compass, but it's precisely the opposite approach that's required; an approach of some vision.

HILLS: Anyone else up here who wants to address that issue? Bob?

PASTOR: Yeah. I— we're more— after the conference of the three leaders, I think we're likely to see a communique that will make it appear that the relationship is slightly better than it really actually is. And the improvements will be incremental on each of the steps, a little bit more consultation on security, a little bit more on regulatory differences.

I think what this statement does is offer a longer-term agenda by which to measure that summit meeting and future summit meetings, and to realize that as Pedro Aspe said, NAFTA succeeded in what it was designed to do. It's expanded trade and investment. It defended intellectual property rights. And the world today is so different from what it was when it was negotiated, that instead of debating that we need to debate the new agenda that we put forward in the statement.

And considering that new agenda, we put forth a whole series of proposals that will require a major step, not an incremental step: to move towards a common external tariff, to move towards creating tri-national institutions, even educational initiatives. To move towards a common security parameter is going to require a paradigm shift, not just an incremental change.

D'AQUINO: David, I almost always agree with my friend, Bob Pastor. I would just make one slightly nuance to comment in that regard. And let's, I think, recognize that beneath the bureaucratese that may be there, for example, in the accord that was signed by President Bush and by Prime Minister Martin, which seemed to be a simple two-page document, and yet if you look at it what does it say? It says, let us talk about how we can go beyond where we are now with smart borders. It talks about how the countries might cooperate more closely on cross-border regulation. It talks about expanding NORAD perhaps to the inclusion of naval— the naval complement within a North American command.

And all of that to me, while it— we may use the word— it's not big bang. It's incremental— if you think about where we are now— and I think analogous arguments can be made with Mexico— if you think about that and you compare that with where we were two years ago, in fact, in my view, it's a steady, albeit slower than this Task Force would like to see, but a steady march towards a recognition of a very different kind of North America than what we envisaged five and 10 years ago.

HILLS: John, do you want to add to that?

MANLEY: Only to say, I think if I understood Tom right, the distinction between incrementalism and big bang is really bit of a false discrepancy. I think that the concepts we've tried to put forward here in— if you look at them one way, they're going to be— they are going to be significant. If we decide today— leaders were to decide today we want to create a common external tariff, that's very important. We get there through incremental steps. If we say that we want to have a common defense and security perimeter, that's very important. We'll get there through incremental steps.

So I— you know, to some degree, I think that there's— you can't ignore the details, but what we're urging is rather than getting bogged down in the details to capture the vision, and the vision is bigger than just the accumulation of the details.

HILLS: Perhaps I'll go to on this side of the room. Question?

QUESTIONER: [Inaudible] yeah. I'm [inaudible] withChristian Science Monitor. [Inaudible] on NAFTA and [inaudible] mentioned that it was successful at what it was supposed to do, but [inaudible] also at least the public had the idea that it was supposed to by creating jobs— and the American public, of course, was most concerned with Mexico— by creating jobs that there would be less immigration pressure and so it would start to remedy the development gap that you talked about. But in fact [inaudible] that it is greater than it was 11 years ago. So how do you— first of all, how do you convince the public that really while going—

HILLS: It's not greater in the north.

QUESTIONER: --farther what was necessary in [inaudible]?

ASPE: Sure. Let me make three comments on that. First, it is true that trade tripled. I mean, that's a fact. Now, let's go beyond that. Where does this come from? It comes basically from the central and northern part of the country. So much so, that 90 percent of the growth of trade comes from the center and the north, not from the south, so we do have a problem there, and the report recognizes that. And that comes exactly— one of the problems that we have is that we have lagged behind in infrastructure with the south. And that's what Governor Weld was mentioned, the need that we— that we enhance the relationship by focusing where the problem is. The problem right now is not in the north. The development got in the north of Mexico in the southern part of the U.S. is coming— is convergent. Not so in the south.

So we do have problems there, and we have problems of two types, human capital investment. We are lagging behind. We do not have the level of quality of the schools, of education generally in the south, plus physical infrastructure. We do have problems there and that explains— and this was not the fault of NAFTA. NAFTA was not geared to that. That's a problem with development, and we have to address that with the domestic policies and [inaudible] the reforms needed to address this issue.

UNKNOWN: Economists believe that if you dismantle trade and investment barriers there will be a convergence in income. And, in fact, the United States is a statement of the truth of that proposition between the northern and southern parts of the United States. There was a huge gap after the Civil War, and that gap has narrowed. It only took 110 years to do so. And the question for NAFTA is whether we want to wait more than that for the gap between Mexico and its northern neighbors.

There is an alternative approach, and that was used by Europe. Europe in mere 15 years significantly reduced the development gap between the four poorest countries and the other countries; significantly so. It did so through a variety of means, including the transfer of a large amount of resources.

Now, we don't need to do the same amount of resources, but the truth is, that commitment on a much larger scale than has been anticipated by any of the three countries is essential if you're going to significantly narrow that development gap. That will require, the World Bank estimates, $20 billion a year for 10 years for infrastructure and human capital, net of interest payments. Obviously, an idea like this right now is not very practical. The issue is whether this issue should be on the table, whether the development gap is an important issue.

Now, one way to approach that is precisely what you said. There were people were argued during NAFTA that NAFTA would reduce immigration pressures to the United States. Of course, that did not happen. In fact, we've seen an increase in unauthorized as well as legal migration since then. And that is unlikely to change without a significant diminution of the development gap, because the implicit model, as Pedro Aspe just pointed out, was to give investment capital to the northern part of Mexico, which is more connected to the United States, which actually served as a magnet for bringing labor from the center and the south of Mexico to the north where it then crossed over into the United States.

So, in effect, the implicit development strategy encouraged unauthorized migration, rather than reduced it. And the only way you really can reduce it is to connect the center and the south of Mexico through infrastructure and human capital investments to the northern markets, and that will require a significant commitment on all three countries' part.

HILLS: Anyone else up here want to address that issue? Let's go to the next question. Yes, sir.

QUESTIONER: Tom Clark from CTV, Canadian Television. It's a question to the three chairs, the three tenors. I want to talk a little bit about politics and the background noise of politics that you're walking into with a rather ambitious agenda to get all this done by, well, within the next five years. It could be argued that even though, Tom, you were saying that relations between, for example, Canada and the U.S. are better today than they were during the free trade debate, nevertheless, you had two champions, political champions at that point pushing the free trade agenda.

With the background that we've got now, Governor, you'd have to convince the White House to get this done in this term of this administration to make it happen by 2010. John, you'd have to figure out how you get an essentially weak minority government that still may be a minority government after the next election that operates on an anti-American agenda to adopt this program within the next five years. Who are your political champions? How do you create political champions for this? [Laughter]

UNKNOWN: Well, one of the reasons that there's a Task Force is that I think we believe that it's important to have some voices out there saying, “let's look at the horizon. Let's look at the future. Let's provide heads of government with an opportunity to be architects of a future, rather than just custodians of the past. And the real challenge for leadership in any country, in any political system is to take an objective and to build a coalition of support around it. But I am convinced that if there's no vision, it's going to be very difficult to build a— to coalesce views around it.

And I think what we've tried to do is to say there is a vision. There is a vision out there that is viable, that has a base of support that will undoubtedly find its critics and its opponents, but if pursued with vigor and determination can improve the lives, the well-being, the security of the citizens of all three countries. So, you know, we're maybe— maybe we’re prophets in the wilderness. I hope not. But surely somebody has to come forward with some ideas to say, “This is how North America, for one, can move forward,” and then it will be up to— it will be up to governments to say whether they have the appetite to take on the challenge.

HILLS: Bill, do you want to add to that?

WELD: I think the strategy is to appeal to the goal, so as to rally the people and the leaders. One of my favorite philosophical conundrums is the so-called naturalistic fallacy: can you derive an “ought” from an “is.” This is a situation where you can derive an ought from an is. Here we are. We have these relationships. If we do X, Y, Z, the following will be the sequel. Our position in the world will be improved. I think if you run through it, people of good will can be persuaded. And at that point in terms of, you know, the achievability by 2010, I mean, it took, you know, five years to fight World War II. We can harmonize a few government policies in that period of time.

HILLS: Pedro?

ASPE: Just a comment. I think it's very important that in the atmosphere of freedom and pluralistic views we discuss some of our problems. For instance, in the Mexican group we discuss a lot what's going on in energy in the country. And I really agreed with the [inaudible] that President Fox have said to do an energy reform in Mexico who are the main importers of gas. Gas imports into Mexico are growing at 40 percent per year in a country that has full reserves. I mean, we have something going on and a problem, and we have to discuss it.

And I think that the way to gather the consensus and the leadership that is needed is first to bring out the facts, discuss it openly, confronted with the realities of the— in this case, of our neighbors, and then propose action for the mobilization. That's what we're doing.


D'AQUINO: Carla, just a quick comment. Again, forgive me for always harping on history, but if you think back to the '70s, it would have been inconceivable that in a meeting like this someone had suggested if we were in Mexico City that the United States and Mexico would sign a free trade agreement with the United States. It would just simply— if you looked at the two countries, their history, their economics, their policies, inconceivable. And while it was not driven from the bottom, it was very much inspired from the top, there was a dramatic turnaround in Mexico with the policy of [inaudible].

In Canada, I don't have to remind you that in the 1980s the conservative government that you said subsequently championed it with one exception in the leadership debate virtually every leader who contested that election, including the prime minister himself, or the subsequent Prime Minister Brian Mulroney opposed the free trade agreement. There were think tanks, there was the business community, there was the [inaudible] Commission that were out in front saying, “Let's do it. It's a good idea.” And eventually the governments came alongside. I think there's some great analogy that can be drawn here.

HILLS: Thank you, Tom. Maybe some of you figured out that you were invited to lunch today, and you might be— it might be possible for you to help rally the troops. [Laughter] Next question. Yes. [Inaudible]

QUESTIONER: Dolia Estevez with Monitor from Mexico. You are releasing this report or this statement 10 days before the summit next week. I was wondering two things. First, do you think or have you done anything to have the presidents adopt this agenda or part of your agenda in this— in their discussions? And, two, what do you expect the outcome of that first meeting of these three leaders will be?

HILLS: This is the launch of the statement, so— but I will— anyone want to address the second part? Another— yes, Andre?

ROZENTAL: I'll also address the first part because, at least in the case of Mexico, there has been a briefing that took place last week on the results of our— this chairmen's statement to the Mexican government so that they are perfectly aware at the levels that they need to be aware of what this says.

And I must say that I— my own feeling, having travelled to Ottawa, to Washington, and living in Mexico City, is that there is a great deal of anticipation on the part of the three governments for this report. And although the full report won't be ready until later on in the spring, this summary of the principal, key recommendations, I think, is extremely timely and useful.

As far as the summit is concerned, this is the first time that the three leaders meet for quite some time publicly, and we think that it is, and hope that it is, an occasion in which the idea of a North America— a North American community or a North America can be visibly shown by the fact that the three are meeting and that the three are going to launch something which is called the North American Initiative. And the North American Initiative covers some of the issues which are in this statement. On issues of border security and enhancement of facilitation for doing business and facilitation for dealing with some of, what we call in the final report, the tyranny of small differences that exists between the three countries and that have in one way or another made the costs of commercial exchanges and our investment exchanges increase rather than reduce after NAFTA.

The issue is that we now have a whole series of new issues between us and among us that in many cases have added burdens to the doing of business between the three countries that the North American Initiative is designed to deal with. So I think that would be the first issue. There are going to be bilateral discussions as well, I suspect, in Crawford, and the idea there is for the two governments, Mexico-U.S. and U.S.-Canada and Canada-Mexico to deal with some of the bilateral issues on their agenda, but the overriding objective here is North America and the trilateral aspect.

HILLS: Yes, we have 10 minutes, so we're going to have to keep our questions moving. Yes, sir?

QUESTIONER: [Inaudible] I hear the report you mention immigration [inaudible] North American investment [inaudible] which might help reduce immigration pressure to the North, but the Mexican [inaudible] immigration reform is one of the main reasons [inaudible] relationship with the North.

I'm wondering, you know [inaudible], what role do you think that immigration [inaudible] movement of people and labor to the North should that [inaudible]?

ASPE: I think you are right on mentioning this. There are two time spaces of the problem: the short term and the long term. I think in the long term, everybody agrees that eventually we have to have free movement of people. I mean, that's a desire of everyone, but of course that's a long term.

The thing is, how do you accomplish that in the short term? And what we think is that what there is on the table and what the government of President Fox has been putting on the table saying we have to address this issue in the short term. We consider that it deserves all the attention and we're backing this because we need to advance further. So, yes, in the short term there is a proposal in the document that you will have in a month or so backing this strategy— short-term strategy.

HILLS: Next question. Yes?

QUESTIONER: [Inaudible] or particularly immigration regulations. What provisions will be put in place to ensure that [inaudible] pressure on Canada for instance [inaudible]?

HILLS: I think that's— yeah.

UNKNOWN: Do you mean how do we deal with asymmetry?


UNKNOWN: Something Canadians should be very good at I'd have thought. [Laughter] If you're the Netherlands beside Germany, you must have to deal with a certain amount of asymmetry as well.

I think that what we need to define is a commonality of objectives, and I think when you start at that level and rather than getting bogged down in some of the what we've called now a couple of times the tyranny of small differences, that you can define in many cases. Whether you're talking about the economic objectives or the security objectives, you can define common objectives. And then what you need to try to do is figure out whether different approaches are necessary or whether they can somehow be brought into line so that they don't impede going forward.

I think we were told by one of our experts that the—at the Canada-U.S. border somewhere in excess of 50 pieces of legislation are sought to be enforced by the customs or immigration people that are there. Many of these reflect this tyranny of small differences. Both countries want to be safe. They want to have a high standard of hygiene, of health. And yet we can't seem to find a way to agree on the exact parameters.

Transportation is an example of a sector where, you know, for whatever reason in Canada, in the United States, in Mexico, local governments with totally different approaches to licensing of drivers, for example, somehow or other manage to maintain a common view about highway safety, and yet between Canada and the U.S., we seem to torment ourselves with some of these differences that actually impede trade.

So I guess what I'm saying, to answer your question, is I don't think that it necessarily has to be the U.S. dictating to its neighbors how things need to be done. I think it's— it requires a coming together in terms of objectives and then a pretty hard-nosed analysis about whether the differences are meaningful, whether they need to exist, or whether they could be eliminated in order to advance everybody's well-being.

HILLS: I see that [Migration Policy Institute Senior Fellow and former Commissioner of the U.S. Immigration and Naturalization Service] Doris Meissner, one of our Task Force members, has joined us. Good to see you. And question here?

QUESTIONER: Yes, sort of on the same lines. I think in some ways in the post-9/11 world, at least in the U.S., there seems to be less of an inclination to actually trust one's neighbors, and I think that getting across the border is much more difficult. And, Mr. Aspe, I have to disagree with you. I think a lot of Americans want to close the border with Mexico. That is the— that's the political reality today. Is that— I don't see— you're saying that long term, everybody wants freedom of movement? I don't think a lot of Americans want freedom of movement and I don't think that— and you can see— you're talking about small differences, Mr. Manley. In the U.S. there is clearly the post-9/11 world. It would seem to me that there is a political view out there that you can't really trust your neighbors.

Get on a plane in Toronto and Montreal to fly into Reagan airport, and you're put through about three levels of security, which don't exist if you're flying from Chicago or Columbus, Ohio, because the Americans don't trust the Canadians to secure those planes travelling over, you know, the capital. I mean, so in what— I mean, aren't you people sort of going in the opposite direction to where political— where politics is going in the U.S., which is to shut back down and not trust outsiders?

UNKNOWN: Let me comment on that. You know, this set of recommendations may not be the set that [conservative political analyst] Pat Buchanan would have espoused, but, you know, we think it's grounded on expert testimony and good reason— right reason. To take your example of delays at the border from inbound flights, it's precisely why we're recommending the creation of a North American border pass to cut down those delays at the border, because there's no reason for those delays at the border. And if you streamline the process of all three of our nations moving across our internal borders, then the enforcement officials can spend more time to detect the passage of those passengers and packages that—

QUESTIONER: Well, there has to be some political will to do that.

UNKNOWN: Well, we're—

HILLS: We're hoping we will generate that.

UNKNOWN: [Inaudible] suffering from self esteem of [inaudible] Task Force, but we're far from [inaudible]. [Laughter]We have mustered this consensus and our hope is that the leadership of our countries will be able to do the same.


D'AQUINO: [Inaudible] let me just comment. First of all, I think the members of this Task Force understand what you're saying because, you know, we watch [CNN newscaster] Lou Dobbs and we read the newspapers and so on. However—

UNKNOWN: Speak for yourself. [Laughter]

D'AQUINO: Well, I do watch CNN from time to time. But I would just say a couple of things. A part of this exercise is also to help educate ourselves and to carry the message beyond. For example, you as a Canadian would know that when Canadians are told there are anywhere between 10 and 13 million undocumented aliens in the United States, does that pose a greater threat to the United States, or does it pose a greater threat— I won't speak for Mexico, but to its northern neighbors? Does the fact that the majority of refugees that come into Canada don't come across the Atlantic or the Pacific, but come across the U.S. border.

The objective here is to get understanding in all three countries that you cannot have a secure, post-9/11 North America unless you have a common approach to security because otherwise, the United States will not be secure. That is one of the things that we're really trying to get at here.

And, yes, public opinion may be of that view, but how do you sell it? You know, when 39 states consider Canada their most important market, you don't have to be a rocket scientist to say, “Look, if there were another major terrorist incident and the borders were shut down, yes, Canadians will be hurt, but what about those 39 states that consider Canada their most important market? You're going to be hurt as well.” So getting the message out as to why it's in our common interest to solve some of these problems is absolutely critical.

And is— you know, when you sit down and talk to Americans in, say, Michigan or California or Ohio or New York, you know, if those borders were really shut down, would you be hurt? Yes, we would. When people fully understand that, that it will provide an incentive to work on— working some of these things out, so it's an issue of identification of common interest here. And in the post-9/11 world, I think it's huge. And that's what divides the post-9/11 world from the world before it.

And I would just say one last thing. The challenge that is coming from Asia— I think the sleeper in this debate, but it's coming alive day by day, is the challenge that is coming to North America from abroad, and that challenge— I don't call it a threat; I call it a challenge— whether it's China, India, or whatever the case may be— China, as you know, has displaced Mexico now as the second-most important trading partner of the U.S. It will displace Canada probably in the next five years. How do you deal with that? How do you deal with that challenge unless you work more closely together?

HILLS: Do you want to say— John?

MANLEY: Could I just add a short comment to that? I actually came from Toronto to Reagan airport today, so I know what you're talking about, but I— you know, despite moving to the private sector, I've maintained my super-elite status with Air Canada, which means I fly a lot. And I'll tell you, yes, it was inconvenient having my shoes removed at the second checkpoint today, but the reality is that air travel has become extraordinarily inconvenient no matter where you're going since 9/11.

And I think, once again, as history teaches us, we're always very expert at winning the last war. When I think of the security issues that trouble me— that keep me awake at night, quite frankly very few of them entail people flying planes into buildings. That was the last war and these extraordinary measures that we've taken not just coming into Reagan, but elsewhere in the United States and Canada and internationally, have made it much more difficult to achieve that objective.

I worry about other risks and if we don't have a common approach to the security of North America, I wager that one of those risks is going to be the next war. And I think it's in trying to instill the understanding that our world has become more dangerous and that it's the dirty bomb in the suitcase, it's the containers that we don't have the means or the will to inspect that are the risks that we face. And the United States may be a superpower; it may be dominant in the world today, but it will not be safe without the wholehearted cooperation with its neighbors in a zone of security that ensures its safety as well as that of its neighbors.

So rather than saying they don't trust us, I'd say that the real concerns that are out there are ones that need to be respected by all three governments. And the measures that we need to take are going to be measures that build on the basis of cooperation.

HILLS: Andre, we'll give you the last, short word.

ROZENTAL: Well, just very quickly, like many on this side of the table, I was very much involved in the process of convincing people about the goodness of NAFTA back over a decade ago, and gentlemen such as the gentleman who asked the question were hundreds around the table saying it couldn't be done. It was divergent from what people wanted. People didn't want free trade. People didn't want to open their doors to— we had [businessman and former presidential candidate] Ross Perot. We had lots of people and they were all naysayers and it was done. So I don't see any reason why this can't be done, too.

HILLS: Well, I hope you all enjoyed this as much as I. There were several hands up and I was unable to get to you in the short hour, but I will invite you again to lunch at— now at 12:30 upstairs, where you can participate in a larger exchange with more press. You are the elite. [Laughter] At—

UNKNOWN: Don't tell them that. [Laughter]

HILLS: At 1:00 to— yes, 1:00 to 2:00.

UNKNOWN: No, 12:30.

HILLS: 12:30 is lunch. 1:00 to 2:00 we'll do this with a broader group upstairs. Anyone of you who wants an encore, please join us. Meanwhile, I hope you enjoyed it. I thought you all did very well. I only wanted to— I only wanted to exercise the chairman's prerogative on one question, and I decided that the time was too short. And that was on a question of, you know, we keep harping on the fact that Mexico— the gap has grown in Mexico. [Inaudible] point out that the gap between the north.

ASPE: Yes, of course.

HILLS: Has actually converged.

ASPE: Yes.

HILLS: And, yeah.

ASPE: We'll have to make emphasis on that.

HILLS: Yeah, and, you know, if we could— we have to correct the problems, but it actually demonstrates the free trade [inaudible] but it just doesn't work all the way down.

ASPE: When you don't have infrastructure.

HILLS: When you don't have infrastructure. [Inaudible]







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