US, Canada and Mexico businesses push for further integration

By James Politi in Washington

ft.com

©Bloomberg

The Keystone XL pipeline

Chief executives from the US, Canada and Mexico are asking their governments to ratchet up the integration of North America’s economies in border clearance, regulation and energy security, in order to create a more competitive trading bloc.

In a joint letter to President Barack Obama of the US, the Canadian prime minister Stephen Harper, and President Enrique Peña Nieto of Mexico, the main lobbying groups for large companies in the three countries said their members “continue to face obstacles to doing business across and within our borders”.

“As free trade agreements proliferate, we must achieve a seamless North American market to be competitive. The challenge before us is to move beyond pilot projects, feasibility studies and regulatory reviews to fuller implementation and longer-term strategic action,” said the letter, which was obtained by the Financial Times.

The effort by the US Business Roundtable, the Canadian Council of Chief Executives and the Consejo Mexicano de Hombres de Negocios comes on the eve of the 20th anniversary of the North American Free Trade Agreement, which tore down many commercial barriers across the continent.

But even staunch supporters of Nafta say the pact has become outdated since 1994 amid big shifts in the global economy. The US, Canada and Mexico are all participating in negotiations on a Trans-Pacific Partnership trade deal with nine other nations that could offer a vehicle for upgrading Nafta, but the business groups argue that even more can be done trilaterally.

One of their key recommendations is to make permanent a programme designed to offer early customs clearance and speed up supply chains in North America. “We are convinced that technology allows secure pre-clearance beyond the border and our governments must do more, eventually recognising the equivalence of our three countries’ security systems,” the chief executives said. They are also asking for “automated and paperless experience” at the border.

Their demands come as Republicans in the US House of Representatives are still balking at an immigration reform bill that passed with bipartisan support in the US Senate and is supported by Mr Obama, partly because they believe it is not tough on border control.

But they also reflect increasing attention around the world to “trade facilitation” – or ways to smooth customs clearance procedures. This is the main focus of negotiations at the World Trade Organisation in Geneva that are expected to wrap up by the end of the year in an attempt to rescue something from the ashes of the stricken multilateral Doha round trade talks.

We are convinced that technology allows secure [customs] pre-clearance beyond the border and our governments must do more, eventually recognising the equivalence of our three countries’ security systems

On energy, the chief executives demanded that Mexico, Canada and the US “capitalise” on their resources to bolster energy independence – which has already been growing as a result of oil and gas production booms across the continent.

They said the US Congress needed to move ahead “without delay” on implementing legislation for a 2012 agreement between the US and Mexico to pave the way for joint efforts to tap hydrocarbon reserves in the Gulf of Mexico. The deal has languished in Congress, after the Republican-controlled House of Representatives inserted language scrapping certain transparency provisions regarding natural resources investments. The failure by the US to move ahead with the deal could hurt the ability of US oil companies to take full advantage of the sweeping energy reforms introduced by Mr Peña Nieto in August.

The chief executives also urged the Obama administration to approve the controversial Keystone XL pipeline linking Canada’s oil sands to the Gulf of Mexico, which has been the subject of a huge political battle in the US. And they asked for smoother permitting processes for energy projects across the board. On regulation more generally, the groups called for sweeping reductions in red tape. “[They] should be open to public scrutiny, should be reviewed regularly for the purposes of determining whether they should be reformed or discontinued, and paperwork burdens should be considered and reduced where possible,” the business groups said.