1. Geoffrey Hale Political Science 3170 The University of Lethbridge October 5, 2010

2. Outline Historical Context U.S. and Canadian policies since 2006 in comparative context Trade and Investment Policies and the Politics of “Fragmegration” Trade Policy Processes: The Politics of Consultation Macro-policy / political agendas Technical policy issues Trade Policy and Public Opinion  A “Permissive Consensus”?

3. U.S. Trade Policies after 2006 Shift in control of Congress to Democrats in Nov. 2006 Stronger union influence hostile to trade liberalization – stronger orientation towards “enforcing” trade deals Reinforced by stagnant, declining U.S. living standards, growing hostility in U.S. Public opinion, even before 2008 recession Loss of “trade promotion authority” (“fast track”) limits administration capacity to negotiate trade deals NAFTA “revision” key focus of 2008 Democratic primaries, despite later Obama retreat to status quo positions.

4. Trade policies under Harper (2006-) Emphasis on firefighting in Canada-US trade relations Negotiation of Softwood Lumber Agreement (# 3) in 2006 Heading off Congressional attacks on Canadian energy exports (esp. oil sands) – e.g. Section 526 Seeking exemption from 2009 Buy American legislation Incremental trade diversification Negotiations of small liberalization agreements with EFTA, Latin American countries (catch up with US, Mexico) Opening negotiations with EU, Korea Stalemate at WTO Defence of supply management interests limits room for expanded multilateral deal.

5. Canada-US Economic Relations “Traditional” and Emerging Characteristics “Enduring” Characteristics (Gattinger & Hale) “Emerging” Characteristics Asymmetries (population, power, relative econ. dependence) Market-driven (“bottom-up”) integration and interdependence North-South economic exchange > traditional “east-west” linkages Political / policy linkages primarily “transgovernmental” (not through foreign ministries) Fragmentation of political / decision- making processes (Executive / legislative / inter-governmental) Continuing areas of policy differentiation despite economic integration. Broadening and deepening of economic relations (“making things together / interdependence”) US focus on security issues  spillover to Canada (borders +) Growing sub-national government relations (esp. provincial – state) Need to consider impact of policy choices on relations with Mexico Growing importance of non-economic issues (e.g. environmental )

6. Fragmegration and the Canadian Economic Policy Agenda Fragmegration (per Rosenau) – simultaneous interaction of fragmenting and integrating dynamics across multiple levels of analysis (international / national / sub-national / sectoral / micro) Result – Coexistence of multiple policy styles characterized by different forms, levels of interaction between (sub-)national policies  ----------------------------------------------------------------------  Conflict IndependenceHarmonization Parallelism -- Coordination -- Collaboration

7. Fragmegration and the Canadian Economic Policy Agenda Hard Law Legally binding and enforceable obligations between / among states (e.g. international treaties) Soft Law Political and legal arrangements of various levels of formality for managing specific areas of inter-, trans-governmental relations E.g. Memoranda of Understanding, international consultative organizations, working groups, specialized intergovernmental bodies.

8. Fragmegration and Policy Processes Both cause and outcome of decentralization of policy processes within governments (from “central agencies” to ‘specialized agencies’) or (from US Executive Branch to Congress) between governments (e.g. from federal to provincial governments) from governments to private, non-profit, or mixed governance organizations

9. Fragmegration and Investment Policies Investment policies increasingly market- and sector-driven in Canada since 1990s WTO provisions governing “national treatment” of foreign investment (w. selected exceptions) - $ 300 mm review threshold Investor-driven regulatory regime (provincial / interprovincial) Contra reg. regime driven by interests of corporate executives or national government officials. Reinforced by Canada’s status as net “outward” FDI investor Competition Bureau major federal regulator (ex. national security regs. under Investment Canada Act // U.S. CFIUS provisions)

10. Fragmegration and Energy Policies Market-driven policy framework driven by trends towards price decontrol, integrated cross-border distribution networks since 1980s Regulatory asymmetries – ownership and primary regulatory responsibility for energy industries in Canada – provincial with residual federal role; U.S. – federal, with substantial state and local role in related environmental and land use policies. Market asymmetries – U.S. major oil importer (> 2/3 of consumption (2008)); Canada net exporter; largest foreign supplier of oil, natural gas, electricity, uranium. Major differences in market integration / context for major energy sources (oil, natural gas, electricity)  significant regional differences in energy markets

11. Trade Policies and Consultation Processes Objective – greater legitimacy through Consultation with key stakeholders and general public Relative transparency through public availability of information, multi-stage consultation processes, citizen engagement, and independent appeals processes following implementation.

12. Citizen engagement vs. consultation Citizen Engagement Consultation Readily accessible information Oriented towards “average citizen” – not interest / activist groups Discussion of broad policy goals (problem identification / feedback) – but within broader context of government policies Frustrating for those at odds with basic policy thrusts Oriented towards formal stakeholders Separate political (big picture) / bureaucratic (technical) processes Usually oriented towards technical details  expertise required (requires substantial investment) Usually function within context of broader policy goals, if with potential for separate sector strategies  often involve different federal departments Potential for “process exhaustion”

13. Public opinion and trade policies Input legitimacy (based on prior consultation on details) vs. Output legitimacy (based on results or outcomes) Publics often divided  supporters / opponents / “broad center” General public typically less interested in technical details than sense that governments are “listening”, addressing broader public concerns Are broad policy outlines within the “permissive consensus” Promoting visible economic well-being while maintaining role of domestic governments accountable to their citizens Appearance of consultation, responsiveness Key sectoral debates may involve more intensive debate with narrower groups of stakeholders (e.g. agricultural sub-sectors, intellectual property)