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Proximity, reality, strategy, destiny Add to ...

South of the border, Barack Obama is bringing a strategic focus to American foreign policy. An emphasis on multilateralism, a determined effort to refurbish the image of the United States, the pursuit of dialogue with Iran, a reaching out to the Islamic world, reinvigorating negotiations in the Middle East, a renewal of nuclear disarmament with Russia, leadership on climate change - these are all part of the President's new global agenda.

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One item that seems to be missing is any strategic focus in Washington on its northern neighbour. Aside from Mr. Obama's campaign proposal to renegotiate NAFTA (since abandoned), the new initiatives coming out of Washington seem directed to the hardening of our common border, the unleashing of a flood of Buy American laws and the badmouthing of our oil sands. Unlike Ronald Reagan, who had a vision of a deep trilateral relationship in North America and free trade throughout the Western Hemisphere, Mr. Obama and his advisers, notwithstanding his choice of Ottawa for his first official visit, show little interest in the relationship with Canada.

If there is no sign in the U.S. government of a strategic vision toward Canada, our own government has reciprocated by showing no sign of interest in a strategic review of our relations with the United States.

But now the forces of history and economic change are challenging the dominant characteristic of our foreign policy for more than half a century: our privileged relationship with the United States.

For much of our modern history, Canada built its prosperity on our greatest asset, our proximity to the world's largest and richest market. Our physical adjacency was our comparative advantage. Fuelled by the stripping away of most tariffs through four decades of postwar multilateral negotiations, the overwhelming majority of our exports went south, goods came to be manufactured jointly on both sides of the border, and trade was largely between companies and their affiliates. The Canada-U.S. auto pact and NAFTA were quintessential examples of the new North American reality: Geography was our destiny.

From the standpoint of commerce, the march of history was toward continentalism and an irrelevant border.

But as the new century began, there was little realization in the country that, thanks to 9/11, the era of our comparative advantage was about to be undermined by the juggernaut of U.S. national security. For more than a decade and a half, no effort was made by any Canadian government to deepen NAFTA, to strengthen its legal foundations, extend it to new areas (procurement, agriculture, rules of origin), achieve a common external tariff, strengthen its dispute-settlement provisions or move toward a common security perimeter with the United States. This was the era of the road not taken.

At first, there was the belief that, through "smart borders," border security could be prevented from trumping the economy. But the U.S. political system gave birth to a gigantic new bureaucratic leviathan, the Department of Homeland Security, which has been determined to turn our relatively open border, the legal basis of our prosperity, into a "real border," in the words of its new czar, Janet Napolitano. Almost on a daily basis, we read of new American measures to police our common boundary, as if our countries were adversaries instead of historic partners in the defence of North America and the free world. Now, in bad economic times, we are seeing the cost of cross-border trade rising and our exports to the U.S. declining.

THE SECURITY LEVIATHAN

The hardening of our border poses a very difficult question. If a Canadian manufactured product must, as a result of economic integration, cross our common boundary half a dozen times in order to be constructed, who has the comparative advantage, the country without a common border, such as South Korea or China, whose goods need entry only once, or Canada and Mexico, whose goods must cross a number of times?

The security leviathan is now part of a triad of forces creating restrictions on access. To border security must be added the rise of protectionism and environmentalism. As a result, the question must be asked: Is proximity becoming our comparative disadvantage?

In the deep recession of the early 1980s, almost everything that moved or came out of the ground was under attack in Congress. Buy American provisions, dumping and countervail actions proliferated. The Canadian response was visionary: It proposed the negotiation of the Canada-U.S. free-trade agreement, with the result that - aside from forest products - protectionist forces were successfully held at bay.

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