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Perimeter deal with U.S. good for Canada, no threat to sovereignty: Mulroney

Former prime minister Brian Mulroney listens to a question from Lead Commission Counsel Richard Wolson at the Oliphant Commission in Ottawa, Tuesday May 19, 2009.

Sean Kilpatrick/The Canadian Press/Sean Kilpatrick/The Canadian Press

Former prime minister Brian Mulroney says he believes a new security perimeter arrangement with the United States would represent no threat to sovereignty but does offer a necessary insurance policy for the Canadian economy.

Mr. Mulroney, who negotiated the free-trade agreement with the United States, said Tuesday the heightened tension over security since the Sept. 11 terrorist attacks threatens the free flow of goods across the border, putting at risk a key pillar of the economy.

"I think it's a good idea and I think it's getting closer," he said in an interview with The Canadian Press.

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The free-trade deal and the subsequent North American free-trade agreement, which added Mexico to the liberalized trade zone, were aimed at removing tariffs from a wide swath of goods exchanged between the three countries.

But none of the leaders who signed NAFTA could have predicted the impact a terrorist attack would have on trade, Mr. Mulroney said.

Trade between Canada and the United States essentially came to a skidding halt after the Sept. 11 attacks and was slowed considerably in the years that followed as skittish U.S. officials sought to reinforce their borders.

"When we did the Canada-United States free-trade agreement and then NAFTA, which has been the driving force of the Canadian economy for the last 15 or 20 years, what it didn't foresee was 9/11 and all the aftershocks of that, the tightening of the border and so on," Mr. Mulroney said.

A new perimeter agreement would largely restore the situation to where it stood before 9/11, he said.

Reports have suggested Canada and the United States are getting closer to a broad agreement to increase co-operation on security while seeking to expedite the free flow of commercial goods across the border.

Although the importance of Canada-U.S. trade has diminished somewhat since the recession, the U.S. market still represents 70 per cent of all Canadian exports, and Canada remains one of the largest trading partners of the United States.

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Bilateral trade between the two countries totals about $1.5-billion a day, down from nearly $2-billion before the recession. About 300,000 people cross the border each day.

In a recent interview, Trade Minister Peter Van Loan called the relationship by far the most important for Canada, adding that even a small increase in trade with the United States would be a boon for the economy.

He blamed weak U.S. demand for imports for much of the recent decrease in south-bound exports, but added that the thickening border has not helped. It will become a greater impediment once the U.S. economy recovers and Americans start buying more Canadian-made goods, including cars, parts, machinery and lumber, he added.

Although there is no agreement or details about what a perimeter deal would look like, concerns are already being raised by some civil society groups, unions and opposition parties about a possible deterioration of Canadian sovereignty.

Analysts say for the United States to sign on to easier passage of goods and people across the border, Canada would need to persuade Washington it can keep security threats from entering Canada.

Mr. Mulroney said he expects concerns over sovereignty to accelerate if a deal is consummated, but added he is not worried that Canada would be any less independent.

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"I've seen this movie before," he said.

"You are talking to a guy who was told in the House of Commons ... that all I wanted was to make Canada the 51st state. I was surrendering sovereignty, that we were going to lose our language, we were going to lose our regional development, we were going to lose our medicare, we were going to lose everything."

More than 20 years after the Canada-U.S. deal and 17 years after Mexico was brought into the arrangement with NAFTA, Mr. Mulroney says the worth of the agreements can no longer be seriously questioned.

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