Creating a North American Community: Chairmen's Statement from an Independent Task Force on the Future of North America

Speaker: Pedro C. Aspe, Task Force chair; former finance minister, Mexico

Speaker: Thomas d'Aquino, Task Force vice chair; chief executive, Canadian Council of Chief Executives

Speaker: John P. Manley, Task Force chair; former deputy prime minister and minister of finance, Canada

Speaker: Robert A. Pastor, Task Force vice chair; vice president of international affairs, American University

Speaker: William F. Weld, Task Force chair; former governor of Massachusetts and assistant U.S. attorney general

Presider: Carla Hills, chairman and chief executive officer, Hills & Company; former U.S. trade representative

Council on Foreign Relations
Washington, DC
March 14, 2005

CARLA HILLS: I'm privileged to share this dais with, we've lost one, but five very good friends and superb public servants. You have in your folders their very outstanding resumes, so I will only briefly introduce each. John Manley, the former deputy prime minister and finance minister, to my left. Pedro Aspe— and I should say, of Canada, excuse me. Pedro Aspe, the former finance minister of Mexico. William Weld, the former governor of Massachusetts. And on my far left Thomas d'Aquino, the CEO [chief executive officer] of the Canadian Council of CEO's.

One week from this coming Wednesday, March 23rd, [Canadian] Prime Minister [Paul] Martin and President Bush— let me interrupt my statement by saying to my far right, Robert Pastor, who was the director of the Center for North American Studies at American University here in Washington.

As I was saying, in the week of March 23rd, President Bush and [Mexican President Vicente] Fox will meet with Prime Minister Martin in Texas, and this summit provides an opportunity for the three of them to revitalize a relationship that is absolutely crucial to each of their free nations. Canada and Mexico are the United States' largest trading partners and among their large suppliers of energy. Canada has long been a key defense ally of the United States and all three share common interests in the challenges confronting the North American continent in dealing with terrorism. For this reason, last fall the Council on Foreign Relations, together with the Mexican Council on Foreign Relations and the Canadian Council of CEO's, launched a Task Force on the future of North America to examine the trilateral relationships and to suggest opportunities for deeper collaborations.

The Task Force has had three meetings: one in Toronto, one in New York, and one in Monterey, Mexico and the report of the Task Force is to be released later this spring. But to take advantage of the March 23rd summit in Texas, the six chairs agreed after consulting with Task Force members to issue a chairman's report. They want me to make it clear that this statement is theirs and theirs alone and does not purport to express the views of all the members of the Task Force. That will come later with the issuance of the Task Force on the future of North America. And I have huge admiration for the chairs and vice chairs and warmly congratulate them for the hard work they have given to put out this statement a month before the final report was planned. Before opening this session to your questions, we will start with short statements by the three chairs, starting with Minister John Manley, followed by Minister Pedro Aspe, and then Governor Weld. The vice chairs, along with the chair, are here to answer any questions that you might have.

Before I turn to Minister Manley, let me give two housekeeping items. First, turn off your cell phones and beepers and other noisy devices that are in your pockets, and I should tell you that this meeting is on the record. So, I begin with you John.

JOHN MANLEY: Thank you very much, Carla, and I'm not sure I am being picked up, am I?

HILLS: Can you all hear?

MANLEY: Is this microphone on? There, it's on, good. I thank you very much Carla, and let me say first of all to members of the Council that I think the undertaking of this Task Force has been a very worthy effort. I would like, of course, at the Council on Foreign Relations to be remembered also as a former foreign minister just in case you think I'm only about the numbers. [Laughter] And when I joined the fraternity of finance ministers, I found out how much in disdain foreign ministers were held by finance ministers. [Laughter] It had something to do with the quality of accommodation and food and beverage that they believed that the foreign ministers enjoyed. I want to say, however, that finance ministers don't do too badly, either.

I'd like to take on a part of the presentation some of the issues related to security that we think will be an important element of the vision that we foresee for North America going forward. We've taken, as Carla has said, the opportunity to make a chairmen's statement a week and a few days before the heads of government meet in Texas really in order to provide some emphasis behind the broader, longer-term vision of the community of North America than we think might have otherwise been the case.

We have a very disparate and qualified group of members of our Task Force who are going to work very hard to provide a more detailed consensus report from the full thirty members of the Task Force in the next month or so, but in the meantime, what we're asking the leaders of the United States, Mexico, and Canada to do is to be bold, to be visionary, to adopt a vision of the future that is bigger than, and beyond, the immediate problems of the present. They could be the architects of a new community of North America, not mere custodians of the status quo.

Security is one area in which, while it may be a preoccupation with many opinion-leaders and lawmakers in the United States, I suspect it is not well understood; not well understood from a point of view that security of citizens of the United States is indivisible from the security of their neighbors. The sheer degree of integration that already exists between our economies and our societies makes it impossible for the United States to be truly safe without the full, wholehearted cooperation of its neighbors. We are proposing a vision of security in North America in which, if you're targeted terrorists, it is at least as difficult to enter North America through Canada or through Mexico as it is through the United States. We start from the hypothesis that this is not strictly a problem of the United States. It is true that the 9/11 terrorists all entered the United States from elsewhere; none of them entered from either Canada or from Mexico. It is also true that in the well-known case of Ahmed Ressam, an individual endeavored in 1999 to enter the United States from Canada was fortuitously apprehended with the capacity and the knowledge to create havoc at the Los Angeles Airport, which was his intention and his idea, I think, of a millennium celebration. Because of that incident, we learned a lot about our vulnerability, and it was in many ways the basis for much of the understanding of the al Qaeda network, which became useful following 9/11, that we acquired from Ahmed Ressam made it possible for us to understand what exactly was happening.

Canada has shown up on a list— a very short list of targeted countries of al Qaeda. The issue of security is not a uniquely United States issue; it is a North American issue. We think that we can achieve more by working cooperatively, by dealing with harmonization of some of the regulations related to visa requirements to asylum. We think that a common entry screening and tracking procedure for people, goods, and vessels would help us with the need of building security. Improved data sharing on exits and entries of foreign nationals, a joint inspection of container traffic as we try to deal with the vulnerability that we face from commercial container traffic, as well as a common approach to international negotiations with respect to the global movement of people, cargo, and vessels.

On the military side, we think that much can be done to enhance existing military cooperation in defense of North America, particularly on a binational basis between Canada and the United States. We foresee the expansion of the existing air-defense arrangements which take place under the NORAD [North American Aerospace Defense Command] agreement, to include maritime approaches as well. We think that there is room to invite Mexico to participate, as well, going forward in broader military cooperation.

Our statement also discusses energy security implicit in the context in which the United States, in particular, is dependent to a very large degree on sources of energy emanating from its neighbors. Canada and Mexico are the two largest exporters of oil to the United States. Canada is the source of 94 percent of U.S. natural gas importation and 100 percent of U.S. electricity importation, although that is a two-way trade. There is clearly a rapid growth in demand for energy resources. Need I mention China? And there is a continuing risk surrounding some of the other key sources of energy for the United States. Need I mention Venezuela and Saudi Arabia?

And so, the importance of taking a continental approach to energy security— to energy strategy, and I would say to natural resource strategy, and broadening that from simply oil, natural gas, and electricity, but to consider other natural resources as well. Mineral and lumber, I might say so as a Canadian, becomes an important element of how we envisioned a North American community going forward. The notion of building a safer and more secure North America is not one which is intended to be a favor to one country as opposed to others. It's a fundamental element of the obligations that every government has to its own people; to protect their personal safety and that of their property. Thank you, Carla.

HILLS: Thank you, John. Pedro?

PEDRO ASPE: Thank you, Carla. Just two comments on the economic matters. As John was saying, we need a new vision for North America. Let's remind ourselves what were the objectives when we signed NAFTA [North America Free Trade Agreement] 11 years ago. There were three objectives: first, to increase trade; second, to increase investments; and third, to defend intellectual property rights. These three objectives were achieved. Trade increased by 200 percent, investments increased by 300 percent, and we defended intellectual property rights.

However, after 11 years a lot has gone on in the world. China has appeared as a major economic force, India poses new challenges, the extension of the European Union to 25 countries; all of these have new realities and new challenges and they require new solutions with a new, bold vision.

[Inaudible] the Task Force. The idea was to get together to discuss some of the long-term initiatives that enhance the competitiveness and security of North America. Let me comment on two. First, we propose the creation of the common internal [inaudible] for North America. This can be negotiated sector by sector and taking the lowest [inaudible] system in each of the three countries and this will enhance trade because the domestic content has meant a lot of trouble in the borders, as you know. And with a new common internal [inaudible] we will have a more competitive North America and trade between our countries will increase very fast.

Second, in countries like Mexico, we did increase trade and investment a lot; however, the bulk of the trade that was increased came from the northern parts of Mexico and from the center, not much from the south. And of course, in the south, that's where we have the big challenges where we have the migration to the north of Mexico and to the U.S. and, of course, we have the problems of widespread poverty. So we need to address this issue, and of course Mexico will need to have new domestic development policies to address that. We need fiscal reform; we need energy reform where our competitiveness is lagging. And in order to do that, we have to gather the domestic consensus for these reforms.

One of the objectives will be to create the physical and human capital infrastructure and the south and to connect the south of Mexico with the north of the country and with our neighbors from the north, Canada and the U.S., so that they become closer to the markets. These are new challenges and that's why we need new visions. Thank you.

HILLS: Thank you, Pedro. Bill?

WILLIAM WELD: Well, I think we'd all like to see a North America characterized by security and prosperity, but also by justice— social justice for our citizens; not entirely forget about the quality of life along the way. So let me just for two minutes address, if I may, the soft power of our consensus up here.

We are all three liberal democracies— all three countries— this should not be rocket science studying the benefits of our increasing economic prosperity among the countries. One of the recommendations that we dwelt on at some length in our discussions was in the area of education. As somebody who has lived and traveled a lot abroad, as most of you probably have, I can tell you there is no substitute for spending part of your formative years in another country to broaden your mind somewhat and prepare you to take a liberal view of the world. That's using the word liberal [in] its good sense, not its sense— [laughter] say I, as a Republican.

But, you know, we think these three countries have so much in common: historical, cultural, political, economic— so many ties. We should have the largest and most vibrant educational network and exchange program among our three countries of anywhere in the world. The opposite is the case. Last September, there were 14,000 Mexican students studying in the United States at the university level, 31,000 Canadians. That's 2 percent and 5 percent of the total foreign student population. South Korea had 80,000. Japan and India and China had between 58,000 and 78,000 students studying here. We really do think, as the Task Force [says], we need a dramatic expansion of the scholarship and exchanges program among our three countries, whether it's an expansion of the Fulbright [Scholar] Program or other new programs, we want to get both students and teachers in exchange programs at both the secondary and university level. We think there should be centers for North American studies in all three countries to promote or create some grist for the mill of these educational exchange programs.

Further, to what Minister Aspe was saying about the desirability of knitting some of the southern parts of Mexico closer to the markets further north, we think that as Mexico adopts these policies to which the minister referred, both the United States and Canada could be of some assistance in creating a North American development fund to help with infrastructure and perhaps human resources and educational initiatives in those southern states in Mexico. We also feel that even a relatively small amount of grant money extended to municipalities and states in Mexico who are committed to transparency could be very helpful in unlocking the path to private capital around the world. There is a lot of private capital that's willing to undertake project finance operations if they could just be assured of the technical competence and transparency to which they are accustomed.

Finally, we think in order to keep the ball rolling in the process of knitting these three countries together [that] it would be a great idea if the three leaders meeting in Texas could declare that henceforth the summit of the North American leaders would be an annual affair. It would be a very succinct and also a very forceful way of underlining the importance of not taking our eye off the ball in terms of the North American initiative. Thank you.

HILLS: Thank you, Bill. Now the floor is open. I'd only ask you to state your name and affiliation. And you had your hand up?

QUESTIONER: [Inaudible] ambassador to Washington said recently that Canada's refusal [in February] to sign on to the ballistic missile proposal [inaudible] some public anger in Canada— to a certain extent, public anger in Canada about the Americans refusing to abide by the communications under NAFTA and— such as [inaudible]. Given an atmosphere that poisoned, I'd just like to get you, Mr. Manley, and you, Mr. Weld, to reflect perhaps [inaudible] politicians on the reality— the real politics of it, and is it possible as you suggest?

MANLEY: Well, let me begin the response to that by saying, you know, I think, in the context of the missile defense decision, it's important that that be seen in the context in which it exists, which is that the United States made the decision to acquire a military capability and Canada chose not to be a part of that. This isn't precedent-setting. In very different times, President [Ronald] Reagan sought community and cooperation with his Strategic Defense Initiative, and in the immediate aftermath of declining that participation, we saw the launch of the initial discussions that led to the Canada-U.S. Free Trade Agreement. So I don't think we should put more weight on the missile defense decision than it's due.

I would agree, however, that the issue of compliance with NAFTA panel decisions has become a serious problem in the perception that many Canadians have of the effectiveness of NAFTA itself. And I guess what we are hoping is that the leaders, when they come together, are not just going to allow themselves to be bogged down in the current issues, but are going to find a way to address the larger and longer-term future; that they are going to be prepared to foresee a vision of a North American community. Some of those issues are going to have to be dealt with along the way; there is doubt about it. But if you don't know where you are going, it's going to be very difficult to find a way to get there. And so our hope is in depositing these ideas shortly before the summit that it will be a call to leaders to look beyond the immediate and look to the— look to the future to construct for themselves a vision of the architecture of the North American community going forward and thereby enable them to find ways to deal with some of the current problems.

HILLS: Governor?

WELD: Well, I agree with Minister Manley. I wouldn't lose too much sleep about the missile defense decision. I think that's quite apart from the architecture of defense collaboration, which has been very close between Canada and the U.S. and will probably get more so as NORAD is expanded to the maritime sphere as well.

The other point about compliance with the NAFTA panels— we think that is— has been a problem. The softwood lumber issue has been perfectly toxic for U.S.-Canadian relations in the trade sphere for some period of time. I am not sure I have a magic wand there. If I [inaudible]--I'd like to buy that issue to get it off the table. One small step that we pointed out is a possibility, is having a permanent roster of NAFTA panelists to deal with disputes as they arise under NAFTA rather then a series of ad hoc panels, and the thought is that the ongoing nature in visibility of such a roster might be of some help in focusing the mind on the decisions of these tribunals.

HILLS: Yes? Please.

QUESTIONER: Bill Courtney. Bill Courtney with computer Sciences Corporation. The recommendations speak of a common— a command— a Canadian-U.S. command that will be multi-service expanded beyond NORAD, but it doesn't speak of Mexico as being a part of that. What additional actions or steps or developments or perhaps security assistance would be required for Mexico, also, to come into such a command in the future? And is that something that the report— the [inaudible] report will envisage?

HILLS: Pedro?

ASPE: Yeah. I would like to make two comments on that. First, the report dwells on the importance of intelligence— of the shared intelligence between the three nations, and I think this is the key, at least for Mexico, because although we have had some cooperation, we have not had full exchange of information between our enforcement groups and this is clearly important.

Second, after September 11, I mean, the great danger that the group was in— was that after good [inaudible] and the U.S. trying to boost its requirements for security, we could create a lot of impediments to trade, and this is a danger. This is a clear danger that we are facing. And the way to solve it is with two things: first, complete exchange of information on both sides of the border, in that case, or trilateral, which will be even better. And second, the use of new technology. We have to use new technology to comply with the security reasons and to maintain the free trade between our countries. So biometrics, for instance, in the case of identification is totally important to do— to do it as soon as possible.

QUESTIONER: Thank you. Thank you for your initiative, too— for taking this initiative. One of the recommendations is to set up a North American development fund with contributions from Canada and the United States, and depending on the contribution that Mexico makes [inaudible] as well, I think it's— I don't quarrel with that. I think it's right. I think the amount should be substantial. But I'm raising the [inaudible] question about Mexico. Mexico now collects, I don't know, 11 [percent] to 12 percent of the GDP [gross domestic product] in taxes. It means that Mexico does not have [inaudible] to do a lot of the things that Minister Aspe talked about. And then the problem comes up with the issue or the debate is [inaudible] legislation in the United States and Canada. The question, I think almost inevitably will arise, "Why should the taxpayers of those two countries pick up the burden that the Mexican taxpayers are not picking up?" Is that a legitimate— is that a legitimate condition?

ASPE: Yeah. I think it's— it is a [inaudible], two very valid points. First, point No. 1, we contemplate that the only way for Mexico to develop fully and to develop the south is to have new proposals on development, and that has to come from Mexico. And they are basically three reforms that we need. The first one is fiscal reform. I will agree with that. Second one is an energy reform. You know, we have to— we have to see [inaudible] problem that we are facing. We have an energy-rich country, which is importing more and more gas from the U.S., which is a [inaudible] country. Our imports of gas are growing at around 35 percent per annum in the last three years and growing. Can this be sustained in the country that has a lot of resources? Clearly not and it is not the case. So, we need to reform and energy reforms will be a second area.

And third, we do not think that the fund should be funded with [inaudible]. I think what we need is first to have Mexico do this its own part. Without that, there is no use— there is no way to have this fund. But after Mexico has done that, I think that what is very convenient is to get, for instance, all the resources of the [inaudible], which are the— to complement them for human capital and physical infrastructure in the south. That will be a very good idea. And to use fiscal monies in a very limited way; have grants for— you know, for very special purposes. But no, we are not talking about using the fiscal resources of the U.S. taxpayers to help Mexico.

HILLS: Governor?

WELD: On your second point about why should the taxpayers pay, you know, I think we don't view spreading the benefits of economic development more evenly as being a handout. We do it as a prudential step that all three countries need to take in their own interest. If you have pockets of less developed areas, it's at some level a source of instability and, in terms of contributions, to dislocations in the economy and even, perhaps, migration patterns. So, I view it as a— [as] in the legitimate national interests of the United States— I won't speak for Canada— to address that situation and for my money, I think we could, you know, go along the lines that Senator [John] Cornyn [R] of Texas has proposed in his legislation and creating a fund that could feed directly into solving that problem.

HILLS: Yes, in the back of the room.

QUESTIONER: [Inaudible]

HILLS: We can't hear you.

QUESTIONER: Joyce Napier, [inaudible] Television. And you know, the leaders of your three countries are meeting on the 23rd here. What guarantees do you have that they will even read this? Are they going to read this? Are you going to reply to it? Do you know?

WELD: En anglais ou en francais? [Laughter]

QUESTIONER: Both, you want both?

WELD: Yeah. First, let me just answer the question in English. I know that Joyce is going to need some clips in French, so I will try to say something. Obviously, there are no guarantees, but one of the reasons that we come out at this point in time when the substantial work of the Task Force still remains to be completed, is that we felt that it was important to put in the hands of the leaders, as well as the hands of the officials that are preparing the summit, some fresh thinking— some bold ideas and to deliver a very simple message, which is to the leaders of the three governments: be bold. This is an opportunity to be architects of the future, and this is not an opportunity that comes to leaders of great countries every day, so it will be to them to respond. But of course there are no guarantees. [Answer repeated in French.]

HILLS: Next question?

QUESTIONER: Mr. Weld is very good in French.

HILLS: There's a mike.

QUESTIONER: Bob Herzstein; Washington lawyer. On the question of energy security the U.S.-Canada Free Trade Agreement had a provision for energy-sharing in the event of a shortage that affected both countries. That was carried forward in the NAFTA, but Mexico did not join it. I was wondering if you felt it necessary to get into that issue— I can understand that it would be very sensitive one— or if, perhaps, you think that would be taken care of in the course of events as the other measures that you are proposing for integrating the economies move forward?

ASPE: As you know very well, oil in Mexico is a very touchy issue, but we have to contemplate it because the truth is that the productivity levels of the production of oil in Mexico are lagging behind the Canadian and the U.S. counterparts in a major way. We are not saying that our productivity levels are 20 percent lower or 30 percent lower. What we are saying is that it is between 10 [percent] and 15 percent of the productivity levels in years to come. So, we do have a problem and we have to face it. And that is why it's so important that Mexico start, you know, looking at it from the modernization point of view. And we will have to tackle the issue and we are starting with gas. That's something that Mexico did not develop in the past.

Now, because of the ecological reasons, we are shifting a lot of our power plants from fuel oil to gas, so we are up in the demand and we have no [inaudible] the supply. We had a challenge here; we have to face it.

MANLEY: Just to add a thought, I think one of the things that we are trying to say is that NAFTA accomplished many objectives at a point in time; but as the world has changed, some of the assumptions need to be re-examined. It's for that reason, for example, that we've recommended a common external tariff. As we have seen tariffs fall elsewhere, what we have found is that the comparative advantage of the reduced tariffs in North America has reduced, but the complexity of the [inaudible] of origin that are necessitated by differing external tariffs is impeding the flow of trade and commerce between and among our countries.

There— yes, Mexico is sensitive about energy. The United States was sensitive about transportation in the [inaudible]. I will leave it to others to say what we were sensitive about. But the time has come, certainly, to look at these areas and to see whether there are advantages to be gained by looking anew at some of the things that we found difficult in the past.

HILLS: Yes, Bill?

QUESTIONER: Bill Pryce; former diplomat. First, I would like to say that I appreciate so much— and I think many of us do— the fact that the Council has taken this initiative at a very important time. And also to add a little bit to the question that the television person had back there, is that no one can be sure that the presidents will read this report, but the prestige of the Council and the quality of the report is such that a great many other people will; people who make the recommendations to the presidents. So I think it is a very important thing and it certainly will be read by many influential people.

But the question I wanted to ask is— it may be it's sort of too tough, but I noticed that there doesn't seem to be in the report anything about labor; about the movement of people. I haven't had a chance to read it, but I just glanced at it. And this is obviously a politically charged question, but given the background of the chairman and the people in the committee and the fact that it will be read— we say, be bold. I would recommend that you be bold and tackle this question, also. I mean, it's a delicate question, but its one that has a lot of history going all the way back to the [inaudible] program and going back to problems we have had. It's involved with the border, but it's much larger than that, so I would hope that you would tackle this problem also.

HILLS: Anyone want to enlarge on Bill's comments or do you just—

UNKNOWN: Go ahead.

HILLS: Let's—

ASPE: I would want— I would want to comment on two things. First, we tend to concentrate all the time on the migration problem from Mexico to the U.S. Let me just first talk a little bit about that. The bulk of the migration comes from the south of the country, and which is exactly the part of the Mexico that has not received the benefits of NAFTA— of more investment and more trade.

When you go to the northern part of Mexico, you see convergence— convergence of income. You see— you know, we had a meeting in Monterey early on, and I was telling my friends from Canada and the U.S. how much convergence you see there on incomes between the [inaudible] and the northern part of Nuevo Leon. Convergence is there. But you have infrastructure and you have excellent education. Why not? Then you have convergence, which was exactly what we would expect.

The big problem comes from the south, where you do not have the physical infrastructure and where you don't have the human capital, capacity, and expenditure on education of good quality. That's where incomes do not converge. In fact, they can be diverged. So what we need is the fundamental reorientation of some of the policies to tackle this problem in the south of Mexico with physical infrastructure and with education. They have to be top on our agenda with Mexico.

Second— and this would tackle the long-term problem. Second thing that I would want to mention is that, is remember that there is migration both ways. Mexico is getting close to have one million Americans in Mexico. Of course, we don't talk about it, but we are having it both ways. And I think it's very compatible to all of us who believe in the free trade. We talk about free trade of capital, labor, goods, and services. And we think that that's exactly what will happen more and more in the future.

And then last, but not least, is the short-term problem. There's a lot of migration coming from the south of Mexico to the northern Mexico, from the northern Mexico then it goes to the States, and for which [we] have two problems. One is economic, and then the human rights and the tremendous suffering that we have to— we have to tackle this problem in the short term while we attack the fundamental cause. And the report, yes, is also on that. And we have specific proposals for both the short term and the long term.

HILLS: Mr. Manley?

MANLEY: I'd like to suggest that one of the concepts that is implicit in what we're trying to do is that the trilateral relationship is not necessarily one which is totally consistent at the same speed for both borders. The northern border is quite a different situation, largely because of the lack of really serious disparity in prosperity. The pressure on immigration is not nearly as great. In fact, it's not quite clear on any given day which way the pressure is building.

I'll tell you the vision that I'd like to pursue for the northern border. This morning I flew from Toronto to Reagan National. I went through a 30-minute line-up to see a U.S. immigration official. I travel with a diplomatic passport. That seemed to help. Going home, sometimes, I don't think it does. I then met an immigration official further on in the process. I then had my carry-on luggage screened and I went through a metal detector. I then went to the gate where I went through another search, removed my jacket, removed my shoes, and opened my belt. That's all I exposed— all in order to get on a plane bound to Reagan National.

It seems to me that if I'm willing to comply with security requirements and have a background check done that I ought to be able to do that with a card, with a biometric identifier that says this person has been through all required security checks and ought to pass through without answering any further questions. Keep the system honest. Pull the odd person aside from time to time and see who they are and what they're doing. That would free up enormous resources to actually deal with the problems that may arise through less secure travelers.

In addition, I don't understand why between Canada and the United States within the next few years we shouldn't have total labor mobility. Why would we not, in Canada, want to invite the best and brightest who want to come and work in our country and contribute to it to do so? If they're willing to pay our taxes, I think they'd be most welcome, as a former finance minister.

Likewise, although we always hate to lose people, we talk about a brain drain from time to time. I think that gaining international experience is an important contributor to our national strength. So we should be moving, at least on the northern border, to recognizing that our skills are transferable, our professional qualifications are equivalent, and that our ability to move across that border is going to enhance our well-being, rather than create a risk to it, and rather than creating barriers to it, we ought to be encouraging it. So there's the vision to go forward, and that can set a precedent for what can be done in the future on the southern border.

HILLS: Thank you. Yes, on the aisle.

UNKNOWN: I wish they'd write it up.

MANLEY: It's coming.

HILLS: It's coming. The Task Force will be out in a month or so.

QUESTIONER: Steve McCall, Program on International Policy Attitudes. As you may know, recently BBC released a poll in which Canada and Mexico public opinion was very negative toward the U.S. Out of 22 nations, Canada and Mexico were some of the, had the most negative attitudes about U.S. influence in the world. Have you factored this into your analysis and considered what can be done to address it?

HILLS: Governor?

WELD: Our self-image is we're truth-tellers telling the truth to policy-makers, and we haven't always dallied to count the potential political cost or difficulty.

MANLEY: I'm closer to active politics than the governor and, you know, I'd like to say there are two rules in Canadian politics. The first rule is, you should not get too close to the United States. The second rule is, you should not get too far from the United States. It's a very precarious balance, and I would not surprise anyone, I don't think, in saying that President Bush would have a hard time getting elected in Canada. That's not high on his list of preoccupations, I'm sure.

But I think that for Canadians— I can't speak for Mexicans— it is important that we realize where we are located in the world and where our interests are, and that we need to pursue what I would call an exercise of mature sovereignty. That is to say, on some things of principle, of history, of tradition, we differ with the United States. On some matters of international policy we think some administrations from time to time get it wrong. But on broad issues of respect for democracy, for the rule of law, for human rights, we can't converge much more closely than do Canada and the United States.

And that in Canada's interest, it's important that while we maintain our identity, maintain our special place in the world, which is different from the United States. We also recognize that [being] part of North America, our future is not independent of the United States. We are necessarily, by history and by geography, as well as by family and social ties and values, irrevocably tied to the future of the United States. And I think Canadians who love to trade with the United States, who love to come to the United States to escape the cold weather, recognize the fact that while we want to be independent, fiercely independent, we also recognize that our futures are cast together.

HILLS: Pedro?

ASPE: Just a comment. I think John Manley has put it very well. I would just want to add one thing. We can differ on the specific things. And the poll that you were saying, you were mentioning, is absolutely right. And I look into it, and it just had to represent short-term policy things.

Now, at the same time you asked the fundamental question about what you think about your neighbors in [inaudible]--of these short-term policies? The opinion is very, very good. It's very, very favorable for— at least in Mexico, towards the U.S. in general. When it comes to specifics on certain events, we can differ because I think that's fine. I think that's part of the freedom and we have to live with it. We can disagree on certain matters and not because of that we risk everything else in our relationship.

HILLS: Bob?

ROBERT PASTOR: Yeah. I've looked at public opinion surveys in all three countries over the last three decades, and you're perfectly correct that recent public opinion in the last year or two years has turned negative. I think most of them focused on differences with U.S. foreign policy. But if you look over the last two decades, you see three trends that are very powerful and that haven't deviated.

First, on the question of values, there is a convergence of values among the three countries that's been found through a World Values survey that comes out of the University of Michigan— a number of people working in all three countries— on basic values of family, on views of government and the market. Secondly, with regard to the way the three countries look at each other, they have historically looked at each other over the last 20 years, ever since the Council on Foreign Relations review in— started in 1974, very positively towards each other. And while there has been a small deviation the last two years, what's marked is how clear each of the countries view each other very positively, more positively than you may know if you listen just to the politicians who take aim at each other.

And the third is on attitudes, which goes to the heart of this project and this report. A poll— a series of polls, mostly notably in October 2003, found that a clear majority in all three countries believed that a North American economic union will be established in the next 10 years. The same survey found overwhelming majority in favor of more integrated North American policies on the environment, transportation, and defense, and a more modest majority in favor of economic— of common energy and banking policies. And 75 percent of the people in the U.S. and Canada and two-thirds of Mexicans support the development of a North American security perimeter. So in short, the publics in all three countries are much more in line with the bold proposal that you've heard described today than they are with the much more incremental approach that it's probably going to merge as a result of the summit in Texas in 10 days.

HILLS: Oh ye of little faith. [Laughter] Yes, please. Wait for the mike, and if you'd state your name.

QUESTIONER: Steven Muller, president emeritus of the John Hopkins University. Has there been any thought either in Canada or in the United States about perhaps making it— if not mandatory, then customary— for Canadian students to take a semester or a year in an American university, and then an American university to take a similar experience in Canada? Admittedly, this is from a professor, but it may be a good idea.

PASTOR: Well, yeah, I can tell you that we encourage this at the American University. We, in fact, have both a summer institute and a semester program. Michael [inaudible] here represents the Fulbright Program in Canada— between Canada and the U.S., has been encouraging it. There is a Killam [Research Fellowship] Program, as well, to encourage semester and year-long study in these three— each of the countries.

What's most interesting is that there is no support for this in the U.S. government. Not only is there no support for that, while the U.S. government supports regional studies programs all over the country on the Middle East, on Asia, there's no— there is no program to support North American studies. The European Union [EU] supports 15 EU centers in the United States, but not one of the three governments are supporting centers in North American studies in any of the three countries.

QUESTIONER: You need to deal with American— excuse me— American enterprise, not American government. I think that you could just [inaudible] foundation to put the money.

HILLS: I'm sure Bob would appreciate any help you could give him in that direction. Next question? Yes. On the aisle. Herb?

QUESTIONER: Mr. Manley, Mr. Minister, could you—

HILLS: State your name and—

QUESTIONER: Herbert Levin. Could you describe for us the evolution of the Canadian defense budget and the organization of Canadian defense? Not Iraq or missile defense, but the kind of thing that the Canadians were famous for under U.N. auspices— peacemaking, peacekeeping— where you see that now, where you see that going in the future in dollar and organizational terms.

MANLEY: What I'll say very briefly about that is that we have seen over the last several federal budgets a significant increase in defense allocations. I think Canada, like many countries in the world, went through a fairly sharp recession not that long after the fall of the Berlin wall. And one of the easiest things to cut was defense spending, and the cuts were severe. And so Canada's role, for example, as you mention in peacekeeping compared to other countries, has declined rather severely.

We have maintained, I think, a strong presence in NATO and in NATO operations— many years spent in Bosnia. A major contribution through NATO to Afghanistan, and to the Naval forces in the Gulf during the Afghanistan interdiction operations, so that, while focused and while very capable in limited areas, the breadth of Canadian military capability has been diminishing and that brings with it certain morale and other issues that have not enabled Canada to play a significant role. We've got some equipment issues.

But I guess to come to the bottom line on this, I think that the will and the population is now increasingly in favoring of greater allocations going to defense capability and spending. I think that time will tell what priorities are established for that; whether it's traditional or whether there are more focused attempts to create these capabilities, say, in peacekeeping or in investments in continental defense. But that the trend is one which is favorable for increased presence and defense capability.

HILLS: Yes, on the aisle here.

MANLEY: Canadians sometimes forget that at the end of World War II, we had the fourth largest military force in the world. We have a strong and proud history in military capability. It's only in recent years, really, that you've seen that diminished to the point that some of us find it a little embarrassing.

QUESTIONER: I'm Ron Hutcheson with Knight Ridder Newspapers. I guess Mr. Pastor has already weighed in on this, but I'd like to hear from the rest of the chairmen. We know what your hopes are for the summit coming up, but I'd like to hear what your expectations are. [Laughter]

MANLEY: Come on, Bill. It's your turn. Well, I— you know, summits are a bit of an unpredictable combination of chemistry and advanced preparation by officials. I think that from all we know, we have the very great attention of officials in all three countries in preparation for this summit, and that the chairmen's statement today will undoubtedly figure in the briefings that leaders receive with respect to what comes out of the summit.

Will they adopt our vision per se? I think that would be rather ambitious of us to hope for. I think what I would hope for is a clear commitment to a continuing process of at least annual summitry with a mandate to officials to work on an agenda that will be bold, rather than self-satisfied. If we can achieve out of this summit, then I think we will have made a major step forward, and it will prepare very nicely the release of the full Task Force report later this spring.

HILLS: Questions? Yes. On the aisle.

QUESTIONER: Peter McPherson, Michigan State. I wanted to take a little— ask you a little bit about how operationally this might roll out in the FTA [free trade agreement] and NAFTA. It was a big thing that was able to pull in a whole set of issues that, if you tried to negotiate them out separately, would never have been able to be done, at least anywhere near that time frame. You have another bold agenda here, and behind each one of these topics are 100 subtopics. And it seems to me annual summits with everybody probably scurrying around to get ready for them, would not— may chip away at that, but it's not clear. And I'm not necessarily advocating it right this month or something, but I'm wondering what your view is as to whether or not there is NAFTA 2 or FTA 2 or something that will pull in a bunch of this. Perhaps there's some issues that are so central, like the security questions that make it hard at this moment to do that. But I would postulate that something big that— with deadlines and other things—

HILLS: Thank you, Peter.

QUESTIONER: --would be necessary to pull us out.

HILLS: We'll ask Tom d'Aquino to answer that.

THOMAS D'AQUINO: Chairman, Peter, I think that's an excellent question. The reason I'm encouraged is, first of all, even when the three leaders meet in Texas, there will be a backdrop to those discussions starting with President Fox when he first came to office and outlined a vision for North America that, as you know, was very ambitious, complimented by the agreement that was signed by President Bush and Prime Minister Martin during President Bush's last visit to Ottawa, the so-called partnership agreement, which deals with going beyond smart borders— beyond where we are now; which talks about exploring how it— in terms of cross-border economics, we can, you know, achieve a higher degree of complementarity on the regulatory front. That particular accord also made reference to the joint planning group between Canada and the United States promoting the idea that NORAD should be extended to include the maritime component. So therefore, what— I think we're— and this— what they're going to be talking about is something that is called the North American Initiative.

So why I feel more encouraged that all of this will begin to come together is because— and you know this as well as I do, because you were there— if you go back to when the first free trade agreement was signed— or when NAFTA was signed, there were a number of economic imperatives that were driving that. But today if you compare today with 1993 or 1998, what is it that you've got that's driving it? First of all, you've got a massive challenge to North American competitiveness by this emerging group of powers in Asia, particularly China and India, with traffic coming from the other parts of the world as well. And I watch American television on a regular basis and these issues are being hotly debated in this country right now. And that is, how are we going to come together to meet this challenge? Canada and the United States, in particular, are high-cost countries. How are we going to meet the challenge unless we come and work more closely together?

And then secondly, of course, you have something vastly more powerful that ever existed in the 1970s or '80s, and it's called 9/11 and the threat of global terrorism. And what your own president has said: it's not a question of if; it's a question of when. So I would argue that the terrorist threat, combined with the economic challenge, presents to the three leaders a cohesive program or a cohesive option that are vastly more attractive and more demanding now than we ever were faced with before.

So there is a natural coherence— and I'll conclude with this, Carla— of energy, energy security and energy interdependence, hugely important in this very uncertain world we're living in now, the need for institutions to catch up with the reality of a relationship that is already far in advance of the institutions that we have, which will demand some form of action on the institutional front.

And then finally on borders, a recognition that, if there were a major terrorist attack on the American heartland tomorrow, we cannot be sure— despite the excellent work that John Manley and [former Homeland Security Secretary] Tom Ridge and others have done, we could not be sure, depending on the severity of that attack, that our borders wouldn't freeze up again. So there's a huge reason for pulling all of this together and selling it as a package that, in my view, has not existed probably in this century.

HILLS: Thank you, Tom. We've run out of time. I'm sorry for that. Before you leave, I'd like to ask two things of the audience. One, there's been much talk about are the leaders going to read it? Is there political will to do it? Well, part of that is up to you. As the Council members, you can talk to others because we are, after all, a democracy. And secondly, I'd like you to join me in thanking our splendid chairs for this advanced statement on this very important topic. [Applause]

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