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North American Union: US & Canada in play?

Diane Francis, National Post Editor-at-Large and Bestselling Author of Merger of the Century, toyed with the idea of merging the US and Canada. In fact, Ms. Francis states that “a merger between the two countries isn’t just desirable but inevitable”. She goes on to say that the US and Canada are culturally compatible on all fronts from lifestyles, to values, and aspirations.

According to Ms. Francis, over the last several decades, “Canada has become more like America and America more like Canada”. For instance, the US has become more progressive on civil, gay, and women’s rights; and even recently universal health care. On the Canadian side, we have contemplated a hybrid health care system with more private sector elements.

If the idea seems a bit farfetched, consider the following. After the birth of NAFTA and the EU (created by the Maastricht Treaty) there was speculation about the formation of a North American Union between (Canada-US). By 2005 discussions were already on their way by US officials regarding the best approach to North American integration between the US and Canada. It was noted that many Canadian economists supported the ambitious goals of a single market like that of the EU.

As of March ‘05, North American leaders founded the Security and Prosperity Partnership of North America (SPP). Set up to provide greater cooperation on security and economic issue. In May, the Task Force published a report praising the SPP initiative and pushing for greater economic integration by 2010.

The report also stipulated that the so-called “merger initiative” should not target a grand scheme of confederation or union; and most importantly did not suggest a supranational government or a common currency/monetary policy. The focus was mainly on developing a North American common market and security perimeter (SPP initiative ended in ‘09; however most of the working groups set up under SPP remain active).

Touching upon fiscal and monetary policy, governing power should remain in each respective country. Likewise, the Canadian Department of Finance strongly opposes the creation of a common currency with the US, as did Jim Flaherty. Some reasons revolve around autonomy loss in the US and Canada respectively, over the likes of setting interest rates and managing the currency itself, among others.

Lending from the EU, what began as a pure economic union in 1958 has evolved into an organization spanning across a multitude of policy areas, from development aid to the environment. As a result, the EU has delivered half a century of peace, stability and prosperity.

With the abolishment of borders, EU members can travel freely throughout most of the continent; not to mention enhanced labour mobility. Another by-product is the development of huge resources ensuring Europeans may draw maximum benefits and influence.

Moreover, the EU’s main goal is to promote human rights both internally and around the world. For example, human dignity, freedom, democracy, equality, the rule of law and respect for human rights, which are core values of the EU and North America alike.

The idea of a Canada-US integration may be gaining steam. From the humble beginnings of NAFTA led by Brian Mulroney and Ronald Reagan, to recently where Harper and Obama announced the Canada-US Regulatory Cooperation Council (RCC) designed to increase regulatory transparency and coordination which translates into a shared vision for perimeter security and economic trade.

Turning to defence arrangements, America and Canada are more intertwined than any other country. In 1958, both American and Canadian forces had cooperated on continental air defence within the framework of North American Aerospace Defence Command (NORAD). Canadians also supported the invasion of Afghanistan in 2001, despite not directly supporting Iraq in ‘03.

At the same time, Canada and the US have the world’s largest trade relationship, with enormous goods and people flowing across the border. Since the 1987 Canada-US Free Trade Agreement, there are no tariffs on most goods passed between the two countries.

Testimonies on the idea are numerous. Prime Minister Stephen Harper, in a statement congratulating Barack Obama on his inauguration, stated that “The United States remains Canada’s most important ally, closest friend and largest trading partner and I look forward to working with President Obama and his administration as we build on this special relationship.” Whereas, President Barack Obama, speaking in Ottawa, Ontario at his first official international visit in February 19, 2009, said, “I love this country, we could not have a better friend and ally.”

In my view, as a number of think tanks such as the Wilson Center and C.D. Howe Institute contemplate the idea and, might I add, show support towards some form of union, it is important to note that the issue has been gaining more momentum south of the border where Hilary Clinton and Jeb Bush have sent Diane Francis complimentary letters thus far.

I am outright for a North American Union between Canada and the US, with some exceptions. I believe the North American Union should be executed in increments and should refrain from achieving any form of political/monetary union from the get go, and furthermore if ever. With that being said, economic and national security union is a must, here is why.

Firstly, by 2030, the BRICs may overtake G7 nations in economic size. The G7 might not catch up because of debt constraints, demographics, and most disturbing is our resistance to change which results in an inability to recognize and counteract the strategies of rivals like China and Russia.

Secondly, on the resource front, the US would be born-again, acquiring a well-educated, relatively law-abiding addition of 35M people, not to mention the immense/untapped natural resources Canada possesses. The synergy potential is huge, and likewise if Canada and the US were corporations they would of merged (at least in economic/border terms) a long time ago. Therefore, in brief, the US brings enormous capital and the world’s strongest military; whereas Canada has vast reserves of undeveloped resources. Remember I am not proposing that Canada become the 51st state.

Lastly, as Canadians we must remember that in order to have a future say and weight on worldwide issues, we must remain and become more dynamic. This means, we must adapt as a nation to the prevailing environment and outsmart our rivals. We must not adopt the status quo in light of China and Russia’s rise to power otherwise we risk getting left behind to the tune of Portugal and Greece.

Challenges in detail, first with Canada: our small, aging population and relatively small economy, lacks resources to develop and defend its enormous real estate. Recently, in a series of buyout attempts and transactions, China has targeted Canada’s resources and empty landmass. Moreover, in 2007, Russia used a small submarine to symbolically plant its flag on the ocean floor beneath the North Pole and underscore its claim to a large swath of the resource-rich Arctic. Russian President Vladimir Putin has been pushing the UN to affirm his claims to the region. This squeezes North America’s control over resources/economic development and puts us on our knees to Russia like Eastern Europe and Germany with over 60% reliance on Russian oil & gas.

On the US side, challenges in creating jobs for its relatively young population, compete for markets, resources and Arctic access with the aggressive rivals like China and Russia. IMF forecasted that by 2018, China’s economy will be larger than the US. The US needs a catalyst to counteract such large and emerging rivals. In my opinion, Canada is definitely it. Canadians and Americans must remember that the Europeans pulled off something far more dramatic, uniting populations that shared no language and had slaughtered one another for centuries.

According to polls; In 2011, a poll by Harris/Decima showed that 65% of Canadians backed greater integration with the U.S. and supported a plan to eliminate the border by blending US and Canadian customs, immigration, security and law enforcement efforts. Those who oppose such integration are on the wrong side of history. Therefore, serious discussion of integration should be a top priority for both the US and Canada alike.

How all of this could play out is an interesting question. If Canada and the US join forces, the North American Union economy would be larger than the EU with a land mass that triumphs South America. The union would be at the forefront in energy, minerals, water, land, and technology; all of it protected by joint US-Canadian military. Size matters and will even more so going forward.

The Prince Arthur Herald
Photo Credit: Flickr, Creative Commons, edebell