Remarks by Canada's Minister of Industry Jim Prentice at COA's 38th Washington Conference

• First, the desire to improve the security and the flow of trade through the U.S.–Canada border;
• Second, the importance of infrastructure, and
• Third, the need to strengthen cooperation in building energy security and protecting the environment.

My remarks focus on the relationship between Canada and our neighbor, most important trading partner and closest ally — the United States. But my message today can apply to all of our partners within the Americas.

In many respects, Canada and the United States have been pioneers in building alliances to protect our borders. We were pioneers in trade liberalization. I believe we will be pioneers in the next phase of collaboration and cooperation in the Americas.

 

Improving the Border

Lessons learned by Canada and the United States working together can be applied across the Americas and around the world. In 1988, Prime Minister Mulroney and President Reagan made a great experiment in trade liberalization when they negotiated the Canada–U.S. Free Trade Agreement. It was expanded in 1994 when Mexico became the third partner in the North American Free Trade Agreement — NAFTA.

The Leaders from these three countries forged ahead with a vision of a liberalized economy. In all three countries, everyone responded to new challenges — workers, business managers and political decision makers. We began to think beyond our traditional borders and markets. We became international players long before "globalization" became a buzzword.

And the results have been positive — overwhelmingly positive. NAFTA has become one of history's most successful trading partnerships. Trade among the three nations is expected to reach $1 trillion this year. The NAFTA partners trade more with one another than with the rest of the world. Every hour, we carry out more than $100 million in trade among ourselves.

By integrating our economies, we have increased the ability of companies to participate in global supply chains. We don't trade goods and services so much as we produce goods and services together. By relying upon niche areas of expertise across the continent, we build products that compete with the best in the rest of the world.

When President Bush, President Calderón and Prime Minister Harper met in New Orleans last month, they highlighted the way we have worked together and the challenges yet to be resolved. Specifically, they asked Secretary Gutierrez, Secretary Sojo and me:

• To increase the competitiveness of our businesses and economies;
• To strengthen energy security and protect the environment;
• To improve our citizens' access to safe food, and health and consumer products;
• To improve our response to emergencies; and
• To make our borders smarter and more secure.

Let me elaborate on that last point. We will use computerized information to ease the flow of trans-border trade. We will create new customs procedures that make the rules more uniform and transparent. We will reduce transactional costs while increasing border security.

We fully understand and respect the priority that the U.S. government has given to security issues. Since 2001, the Government of Canada has invested more than $10 billion in security measures. We will continue to be a strong partner in addressing security. Our 2008 budget invested in a variety of measures to minimize border delays and facilitate the movement of people and goods, while ensuring that illegal persons and goods remain out of the country. By making North America a safer and more secure place to live and to do business, we will help to alleviate some of the concerns that have led to a thickening of the border and new constraints on legitimate travel and trade.

As Prime Minister Harper has emphasized on many occasions, security and prosperity depend on each other. We work together to bolster security in a manner that does not come at the expense of the prosperity from trade and travel, and we also seek ways to make our regulations more compatible.

The chambers of Commerce in both Canada and the United States recently released a report on security and trade entitled “Finding the Balance: Reducing Border Costs While Strengthening Security.” It highlights how businesses have invested heavily in improving their own security features or in participating in programs to pre-clear trusted shippers. And yet, in spite of their investments, many find their inspection rates have not decreased. In fact, they've increased.

This parallels the recent report by the NACC. Here is what it says about the issue:

"Businesses in Canada, Mexico, and the United States are bearing the burden of new measures to enhance security, as well as more rigorous enforcement of existing rules. This means that businesses in all three countries are facing longer delays, higher inspection rates, additional fees, and more layers of security when they can afford it least."

Ladies and gentlemen, these are the words of the industry-led council that has studied this matter in detail. I would add that these problems have created a two-headed monster. We want security and prosperity. Instead, we make it more difficult to have either. Not only do we hamper the legitimate trade and travel that provide the foundation for North America's prosperity, but we are also clearly misallocating resources. The dollars, hours and resources spent investigating legitimate travel and trade are dollars, hours and resources that would be better spent targeting the areas of highest risk.

In the words of the NACC, "We need to make significant progress on practical measures to cut costs, reduce barriers, and ensure that people and goods move smoothly, efficiently, and securely among our three countries."

The auto industry provides a telling example. The costs and delays of an automobile part as it travels across national borders on its way to final assembly add several hundred dollars to the price of a North American-built vehicle. Not long from now, we will see the first Chinese- or Indian-manufactured vehicles arrive on North American shores, ready to be sold to eager consumers. These vehicles will have encountered a border delay only once.

We will need to compete in this market on the strengths of an integrated North American economy. We must take advantage of the niche strengths provided by each of the NAFTA partners. And we cannot allow our strengths in know-how and skills, technology and innovation, energy and resource costs become debilitated by regulatory or infrastructural weaknesses.

Infrastructure

We must make transportation a source of North American advantage.

In New Orleans, the three North American Leaders discussed ways to coordinate our respective investments in border infrastructure to reduce bottlenecks and congestion. We all have an interest in building strong corridors to enhance North American trade.

Canada is investing an unprecedented $33 billion in long-term, stable and predictable funding to meet infrastructure needs. For Canada, nowhere is more important than the Ambassador Bridge that joins Windsor, Ontario, to Detroit, Michigan. On a typical day, that bridge carries more than 8000 semi-trailers. About 40 percent of Canada's commerce with the United States crosses that bridge, and it carries more trade annually than the entire trading relationship between the United States and Japan.

But it is not an easy crossing.

Shortly after I became Industry Minister, I wanted to experience first-hand the frustrations that our cross-border trade can encounter. A senior executive from a successful automotive supplier was good enough to have me loaded into one of the firm's transport trucks. I traveled across the Ambassador Bridge as if I was an auto part and I witnessed the delays myself. This experience galvanized my conviction that we need to maintain momentum in the design, approval and construction of an alternative bridge crossing to increase our trade throughput.

The governments of Canada and the United States have roles to play; so do the state government of Michigan and the provincial government of Ontario. We continue working with our binational partners and are determined to build this new bridge between Windsor and Detroit. In fact, we just announced $1.6 billion to link Highway 401 with that new bridge.

Energy and Environment

Ladies and gentlemen, it is not just the infrastructure of asphalt and concrete that links the economy of the Americas together. Another infrastructure is equally important — electrical power lines and oil and gas pipelines.

In the years ahead, energy will be a major source of competitive advantage for many of us. World energy demand will not decrease any time soon. In fact, it will continue to grow. And energy will be a North American advantage because we have such abundance. We also have the infrastructure, the technology and the will to find innovative ways to use energy to build competitive strength.

The oil sands of northern Alberta provide a good lesson in how these resources are developed. Early fur traders used tar sand to patch their canoes. In the 1920s, a university researcher discovered how to use steam to remove the sand from the bitumen. And in the 1970s, the Government of Alberta invested $700 million to try to find an economical way to do this on a business scale — a huge investment at the time. Government worked with industry and together we went down many blind alleys.

Gradually, researchers found ways to bring production costs down and the price of oil continued to rise. Today, the oil sands development drives a significant portion of the Canadian economy, and it is a very important part of a secure energy supply for North America. Largely on the strength of the 173 billion barrels in the oil sands, Canada has 14 percent of the global oil reserves, second only to Saudi Arabia.

I emphasize the role of science and research because we need to apply the same approach to addressing the future of energy development.

Forty years ago, the scientific and technological challenge was to produce oil from tar sand. Today, the challenge is to do it in a way that reduces our impact on the environment. There are many environmental challenges in the development of the oil sands. Environmental challenges are always the flip side of producing or consuming hydrocarbons.

An unfortunate event occurred just last week when several hundred ducks died after landing in a tailings pond. I'm an avid fly fisherman. I would call myself a conservationist. And I share the concern of the people who are deeply disturbed by the images that have come out of northern Alberta. What happened was unacceptable. Those responsible will face full scrutiny under Canadian law.

Prime Minister Harper has made it clear that he wants Canada to be the most responsible environmental producer of oil and gas in the world. And as Minister responsible for pipelines, I will ensure that strict environmental standards will be adhered to in our northern and Arctic region should the Mackenzie Gas Project proceed.

The answer, ladies and gentlemen, is technology. Once again, we need full government and industry pressure on technological innovation. I have every confidence we will be just as successful meeting the environmental challenge as we were the cost of oil sands production. The challenge, however, is a race against time.

Since 1990, industry has reduced the carbon dioxide intensity of oil sands production by 45 percent. New legislation and regulations will require even more dramatic reductions.

In the meantime, the industry continues to act. It recycles its natural gas by-products and uses them for petrochemical feedstock. It recycles petroleum coke by-products and produces synthetic gas. The result: an industry that is a net user of natural gas today could become a net supplier of natural gas to North America tomorrow.

The industry has found ways to recycle its water, and reclaim its tailing ponds, and is looking at ways to inject carbon dioxide into geological formations — return the carbon to the ground it came from. It partners with wildlife and conservation groups to preserve habitat. And one oil sands company, Suncor, has even been recognized as one of the best companies in the world for going beyond what is required to operate in an environmentally sustainable way.

We've come a long way. Industries have reduced the amount of greenhouse gas they emit, and the amount of water they use per unit of energy. But the total amount of energy the industry produces continues to rise. So we need to go still further. We need new ideas and new technology.

Ladies and gentlemen, this raises yet another strategic advantage we share in the Americas: we are a resourceful and innovative people. For many generations, we have used our science and technology to try to overcome nature. Today, we race to find ways to use it to live in greater harmony with our planet.

We share a legacy of scientific and engineering excellence. Our universities, our technology institutes and our research labs have pushed back the frontiers of knowledge and applied what we know to making the world a better place.

And now the time has come to redouble our efforts and to collaborate so that together we can help to solve this global challenge.

We've seen enormous progress in nuclear technology; and in the past years, we have seen renewable energy expand and prosper. Governments are investing heavily in developing and promoting clean coal technologies; and in Canada, we recently dedicated substantial funding to carbon capture and sequestration.

The momentum is building. But we need to work in concert. Canada, the United States and Mexico are developing a framework where we can harmonize our energy efficiency standards and share technical information. We are working on ways to promote biofuels and enhance our electricity networks. Together we can address North America's air quality and other environmental challenges. We gain when we work together on energy and environment issues.

Conclusion

Ladies and gentlemen, the Americas share a history. We share opportunities in a global economy. The Canada-U.S. Free Trade Agreement and NAFTA helped to usher in the era of globalization. Today, highways and railways carry trade across the borders. Electric power lines and oil and gas pipelines connect our nations into energy grids. Airports welcome travelers from across the hemisphere and around the world. And yet, we face renewed challenges to keep the trade and traffic moving freely while enhancing our surveillance against security threats that are very real.

We have opened our countries to trade — now we need to meet the challenge of opening our borders to trade. We are addressing the challenges of collaborating on mutual security. We will work together to meet the challenges of climate change and preserving the environment. The time is right to ask big questions and to explore big ideas that will build a stronger, more prosperous, more secure North America, within a more confident and prosperous Americas region.

Thank you.