Canada-U.S. Trade: Promoting Regulatory Cooperation

Trade with the U.S. is by far the single most important foreign relations issue Canada has. It forms a central part of Canada’s economic security and strategy for growth. This election has witnessed a number of issues profiling the complexity of our trading relations with the U.S., such as the Keystone XL Pipeline and the Windsor-Detroit Bridge. However, there has been little attention drawn to the persistent burden and costly reality of differing U.S. and Canadian regulations and its impact on trade. Addressing these trade barriers may not be as salacious of an election issue for some, but it is ultimately the path to enhancing our trading relations with the U.S.

This is certainly not a new issue for government or industry. Unnecessary or duplicative regulatory controls have had a long history of hindering Canada’s trade with the U.S. These differences can impose significant unintentional costs on businesses and consumers on both sides of the border.  Overcoming these regulatory barriers is not an easy feat. We have seen different attempts by Governments over the years, the most recent and perhaps most substantive being the U.S.-Canada Regulatory Cooperation Council (“RCC”) announced by the Conservatives in 2011. The RCC initiative has sought to improve the flow of trade by seeking greater alignment of regulations between U.S. and Canadian agencies. However, to date, there has only been modest success, and for many, the pace of change has not been inspiring.

The Liberals have a history of creating similar partnership agreements with the U.S., albeit not as broad as the RCC. Not surprisingly, they have taken a cautious approach to the Conservative’s RCC initiative. When the RCC was first announced, Liberal Agriculture Critic Wayne Easter stated: “Canadians understand the importance of making our trade relationship with the United States more efficient, but they also expect us to defend Canadian standards and structures that have served this country well.” The NDP, on the other hand, has been less vocal on the merit of the RCC initiative and has taken a more “Opposition” styled approach (see Global Election Insight September 24 – here). On select policies, they have leveraged the RCC principles against the Conservatives for inaction on other trade irritants. One example is their call to restore Canada’s privileged access under the U.S. Perishable Agricultural Commodities Act.

This election the Conservatives have profiled their past efforts on red tape reduction and pledged to work to harmonize Canadian regulations with its major trading partners, a clear sign that they remain committed to the RCC initiative. The Liberals and NDP have pledged to strengthen Canada’s trading relationship with the U.S. through improved dialogue and diplomacy. The Liberals have proposed to go as far as creating a Cabinet committee to oversee and manage Canada’s relationship with the U.S. This may help set a particular tone politically, but, it will not drive market access and growth opportunities across our borders. For business, outlining structured policy to further the pledged commitments under the RCC initiative should be a priority for all party leaders. With what appears to be a vulnerable economic climate amidst a flagging Canadian dollar, the opportunity is ripe for all political parties to profile the merit of greater regulatory cooperation with the U.S. Not only is this a ticket to alleviate red tape and regulatory burdens for business, but it will assist in stimulating growth for Canada’s domestic industries and enhance our trading relations with the U.S.