On The Cusp: Energy, Cross-border Action Plan and the Trans-Pacific Partnership

This series, written by Paul Frazer, the Canadian Chamber of Commerce’s Washington, DC-based Special Advisor on Canada-U.S. Relations, provides briefs on issues and events that have implication for Canadian businesses. Mr. Frazer has over 15 years of experience in this area and is a well-known and influential player in Canada-U.S. issues.

Although 2012 began in Ottawa in a somewhat orderly fashion, in Washington, DC the pre-holiday acrimony and legislative bottleneck continued. The negative environment will worsen when the House and the Senate return to work this week and next. For the moment, the political oxygen has been absorbed more by the ongoing political infighting underway among the Republican Party candidates for president.

It is clear the Republican primary races will be a central political focus for the next few months. As the November 2012 presidential election date gets closer, legislative activity in Congress will recede and by the end of June (or sooner), there will be little appetite on Capitol Hill to propose and debate serious legislation. Politicians will more frequently be absent from Congress (especially the House) in order to be back in their districts to fight for re-election. The single digit approval ratings that members of Congress now experience means that few members, regardless of political party, can be complacent about the certainty of victory in November.

As mentioned in previous messages to you, the presidential campaign is very much underway and decisions by representatives, senators and the president are increasingly made through the prism of the political campaign. This is not unique to Washington of course, but for the Canadian government and public policymakers and business, it does mean that issues of importance to Canada will not be dealt with expeditiously nor necessarily with an outcome favourable to Canadian interests.

In the latter part of 2011 amid charges that he was engaging in “crass political politics,” the president announced his decision to delay a permit request on the Keystone pipeline project.

Legislation passed on December 23, 2011 gave the president 60 days to determine whether the Keystone pipeline is in the national interest. As of this writing, the State Department has decided that it lacks sufficient time in which to obtain the information necessary to make an appropriate assessment. Nonetheless the department said that it is open to subsequent permit applications “or applications for similar projects.”

Keystone became a ready and available political football. As such, it was at the centre of political noise made by both political parties to the detriment not only of a rational, transparent determination of the project but to a clear understanding of the true worth to the United States of the broad, secure, and reliable energy relationship with Canada.

I wrote some days ago that the greater the partisan effort to corner the President on this, the greater the possibility he might be forced by politics into a negative decision. Unfortunately this notion was confirmed by the State Department decision. This is not a decision about Canada; it is not about the bilateral relationship. It is domestic; Keystone will continue to be the football it has become for as long as it suits one set of partisan interests or another during the primary season and into the next phase of the presidential election period.

On another front, in early December Prime Minister Harper and President Obama announced a Canada-U.S. initiative, the Action Plan on Perimeter Security and Economic Competitiveness. The bilateral border action plan is just starting to find its footing; it too has some particular importance for Canadian economic (and political) interests. Here too, the evolving political climate may well endanger the success of this undertaking. Many are concerned that the present environment will not be conducive to implementing features of the Harper-Obama border action plan. It is essential that both governments ensure they appoint individuals to their respective working teams with the authority to negotiate where necessary and to implement where possible on a “fast track” basis.

In each capital, competent and sufficiently senior officials with appropriate authority are required to channel what needs to be done under this bilateral project. The role of Canadian and U.S. business is critical to the success of these efforts, especially in the area of regulatory change and development. It will not be sufficient to push for invitations to meetings and to show up only to listen to what officials bring to the table. Business must bring sector-specific insight and expertise to the discussion domestically and bilaterally; government has only part of the picture and confident, informed input by business will be essential to moving both governments and the private sector toward identified goals and objectives.

It is in the interests of governments and business that their deliberations and the outcomes of that work demonstrate to Canadians and Americans that the effort is worthwhile. The public has a right to see demonstrable progress that affects their daily lives in positive ways whether it be at a border crossing, an airport or in access to goods and services in a more timely and cost-effective fashion. The distractions of the presidential campaign will divert more and more energy from Canada-U.S. efforts and the onus for progress may increasingly be on the Canadians to help all parties “keep their eye on the ball.” Neither Ottawa nor Washington can afford to regress on this very important set of bilateral activities; the long-term interests of each country are in play in a way that will be invisible to most citizens on a daily basis.

At the risk of clouding the bilateral priorities, there is another issue of both an important bilateral and multilateral mix. This is the Trans-Pacific Partnership (TPP) in which the prime minister has said Canada wishes to participate. Once again, governments can take the first steps in seeking “membership,” but business has a critical role to play in helping to make the case with the U.S. government and other member governments that this is an arrangement in which Canada can play a constructive and productive role. Any signs of Canadian reticence to play the game fully will not serve Canada’s cause nor the interests of business and Canadians generally.

At a time of greater scepticism about government and the private sector generally, this moment is a litmus test for those who propose that the public and private sectors can indeed work together to craft an environment in keeping with the national economic needs of Canada and the United States. Whether it be energy, a bilateral border security and economic initiative or the new efforts to join the TPP, if we fail on this occasion then many predict it will be some time before the bilateral political and economic climate will permit a second attempt of this magnitude.

Paul Frazer is a Principal in 3Click Solutions LLC where he brings his expertise to bear on behalf of companies with interests to promote and protect in Washington. He has worked on a variety of economic/trade and policy cross-border issues affected by legislation or attempts at legislation for clients in financial services, energy, environment/climate, health care, and natural resources sectors. He can be contacted at 202.683.6085 or Paul.Frazer@3ClickSolutions.com

http://www.chamber.ca/images/uploads/General/Dispatches_Washington/2012/DFW_January_2012.pdf

Read his comments below:

US and Canada to speed border traffic
December 7, 2011 8:15 pm

By Bernard Simon in Toronto

The US and Canada have unveiled a long-awaited plan to streamline traffic across the world’s busiest border while strengthening security measures.

The multifaceted initiative, announced during a visit to Washington by Stephen Harper, Canada’s prime minister, will take the two countries a step closer towards an integrated North American security system. It includes harmonising a wide range of procedures and regulations on the movement of goods and people across the border.

A senior US government official said that the plan would lead to shorter waiting times and greater efficiency at border crossing points “without losing the security element that is essential to the well-being of both countries”.

Screening processes will increasingly be moved away from the border by, for instance, greater use of a “trusted traveller” programme.

While the two governments have set specific timelines for many of the changes, some could take years to implement.

Each country is the other’s biggest trading partner, with two-way trade totalling $447bn in the first nine months of this year, according to the US Census Bureau.

Canada made up 16.2 per cent of the US’s foreign trade in September, followed by China with 14.2 per cent. The US accounts for more than two-thirds of Canada’s foreign trade.

Paul Frazer, a consultant on US-Canada relations based in Washington, described the plan as “an attempt to move to a new normalcy that we all presumed would happen as a result of Nafta (the 1994 North American Free Trade Agreement) but was interrupted by 9/11”.

Extra security measures imposed by the US since the September 2001 terror attacks have been a thorn in the side of businesses and travellers.

In particular, Canadian officials and business leaders have expressed concern that the thickening border discourages investment in Canada, especially by the automotive industry which depends on reliable, just-in-time deliveries.

Canadian cities close to the border, such as Windsor, Ontario, have seen a sharp fall-off in American visitors as US border controls have tightened.

The plans announced on Wednesday include the harmonisation of US and Canadian vehicle emission, fuel economy and safety standards. Labeling requirements for hazardous chemicals will also be standardised. Canada will align its cargo and passenger screening procedures with US standards.

Canadian civil-liberties groups criticised the drive to harmonise security measures and ease trade flows on the grounds that it would give US authorities access to vast amounts of private information on individual Canadians. Other critics have raised concerns that the so-called “security perimeter” will undermine Canadian sovereignty.

Mr Frazer said that Ottawa was as concerned about security as Washington. “The Canadians have shown over time that they take this seriously and they have put money and muscle behind it.”

Why new U.S.-Canada border plan will boost manufacturing and Ohio exports: Laura Dawson and Paul Frazer
Published: Thursday, December 08, 2011, 3:39 AM Updated: Thursday, December 08, 2011, 6:09 AM

By Plain Dealer guest columnist

Border delays between the United States and Canada add about $800 to the price tag of every new North American car. A car manufactured in Korea or Japan clears customs only once when it arrives at a U.S. port, but a North American car is subject to border-related fees and inspections at least seven times as it crosses between the two countries in different stages of production.

We complain about Chinese competition while we fritter away the home-court advantage. Economists estimate that 5 percent of the cost of a North American product goes to pay for border and trade inefficiencies on the U.S. border with Canada.

The advantage that was created by integrating U.S. and Canadian manufacturing through the North American Free Trade Agreement has been lost to layers of red tape and regulation.

Wednesday’s release of the U.S.-Canada Beyond the Border Action Plan by President Barack Obama and Canadian Prime Minister Stephen Harper is an important step to reversing the decline of North American competitiveness.

Canada is the top export destination for 36 U.S. states that rely on trade with Canada for their economic well-being. This trade supports

5 million U.S. jobs. Despite the magnitude of the relationship, we’ve neglected our shared border. Delays, red tape and lack of coordination cost U.S. businesses an estimated $4.1 billion a year.

In Ohio, there are more than 211,000 jobs supported by trade with Canada, but Ohio businesses lose around $417 million a year to border delays. It’s clear that a streamlined border will create jobs.

When our leaders signed the first U.S.-Canada free trade agreement more than 20 years ago, they imagined a hassle-free border where U.S. and Canadian firms could take advantage of the best available resources, know-how and markets, and benefit from the cost savings of just-in-time production.

Since then, ramped-up security, eroding infrastructure, too few resources and too many steps at the border have forced businesses to shift from just-in-time to just-in-case production; they routinely double-order and stockpile expensive inventory to guard against border bottlenecks.

Secretary of State Hillary Clinton announced recently that U.S. trade policy would focus on trade and investment opportunities in Asia. Yes, U.S. exports to China have tripled over the past decade — but that is still only 7 percent of America’s total exports. Canada buys nearly three times as many U.S. goods as China does, and those purchases are a net creator of U.S. jobs.

The United States and Canada are, of course, concerned about foreign and homegrown violent extremism in a way that we weren’t 10 years ago. The new U.S.-Canada border plan provides the tools to create a border that is not only safe but smart.
Obama and Harper have provided a practical road map to promote greater security and prosperity in the United States and Canada. Some of the specific improvements they have announced are:

• Pilot programs that will allow cargo to be pre-screened on the factory floor.
• Harmonized procedures for data collection and administration.
• Single shipping windows in the United States and Canada that are also “smart” enough to talk to each other.
• Trusted-trader programs that are accessible to small-business traders.
• Faster and more predictable crossings for business travelers.
• Easier movement for technicians who provide after-sales service.
• Better traffic management approaching and at the border, including road signs with real-time information on border delays.
• Improved information-sharing and identity verification so that people engaged in legitimate trade and travel reach their destinations sooner.

Unless we renew our commitment to building things together better, North American manufacturing and the jobs it supports will be a distant memory. Our governments have taken the first steps by creating a plan for a streamlined border. Now voters need to hold politicians accountable to deliver on the deal and to promote sustainable economic growth and job creation, and not let it get sidelined by shortsighted politics. This should be and should remain a national priority for the United States and Canada.

Laura Dawson is a public policy scholar at the Canada Institute at the Woodrow Wilson International Center for Scholars and president of Dawson Strategic. Paul Frazer is board co-chair of the Canada Institute and a U.S.-Canada specialist at 3Click Solutions in Washington, D.C.

Ottawa gets the attention it craved
December 07, 2011

By Mitch Potter

WASHINGTON—A bold new era for borders, trade and security opened Wednesday to the sound of one hand clapping — the Canadian one, of course. The American was elsewhere, scratching itself, perhaps.

Or so it seemed going by the excitement differential.

Prime Minister Stephen Harper’s team built the unveiling of the action plan to unclog the Canada-U.S. border into something approximately the handing down of the 10 Commandments.

Canadian media were sequestered, budget-style, inside the confines of the Canadian embassy for three hours after a midday preview of the deal. The information was not just embargoed, the press were under confinement, forbidden from leaving till the leaders themselves told the world.

The Americans, by contrast, made far less fuss. The border deal went unmentioned Sunday in a White House conference call outlining President Barack Obama’s week ahead. And though a trio of Obama administration officials offered a background briefing Wednesday, there were few signs of major U.S. media interest.

Does this mean Mr. Harper’s trip to Washington falls under the realm of “Worthwhile Canadian Initiative,” to quote a New York Times title that famously inspired a contest for the world’s most boring headline?

No, actually. As the day unfolded and the deed itself — Obama and Harper standing side-by-side, for the 11th time, no less — transpired, the U.S. broadcast universe dutifully obliged. CNN went live. So, too, did Fox News, staying with it until Harper began speaking French.

It speaks volumes about the Ottawa-Washington relationship that Obama took the time, given how all of Washington now is consumed with the 2012 U.S. election, now barely 11 months away.

“The sheer fact that the Prime Minister was able to get Obama’s time and attention at this point in the U.S. political cycle is significant,” said Raymond Chrétien, a former Canadian ambassador to Washington.

“This is a significant deal and we all need time to digest the details. But from the optical perspective, Harper needed Obama to give it gravitas. And as someone who had doubts, initially, about how well this political duo would function together, I have to say that I am impressed.

“Canada always struggles for the American radar. It is the nature of Washington. But consider how easily this could have been passed down a level, to a senior minister. Harper and his team managed this very well.”

Obama, in his televised remarks, went beyond the usual bon mots — “no two nations match up more closely together,” et cetera — to emphasize Canada’s “special role” in the broader goal of American economic revival.

“Canada,” he said, “is our single largest trading partner, our top export market, and those exports — from cars to food — support some 1.7 million good-paying American jobs.

“The Prime Minister and I are determined, not just to sustain this trade, but to get it growing even faster . . . . So Canada is key to achieving my goal of doubling American exports and putting folks back to work. The two important initiatives we agreed to today will do just that.”

Though the U.S. media didn’t play it as much more than a passing blip, the tonality from Obama — and by extension, all who work under him — is precisely what Ottawa craved.

Considering how easily Washington tends to bang the Buy America drum, the anti-protectionist message inherent in Obama’s words was palpable. More palpable, perhaps, if he actually wins a second term and sticks around to see what becomes of the plans unleashed Wednesday.

“The proof, as always, is in the eating. And we’re still a year or two away from seeing the early results of what they’ve put on the table today,” said Paul Frazer, a former Canadian diplomat turned Washington consultant.

“We can’t be complacent. We need to watch it closely as these action plans unfold. But anyone involved in any kind of cross-border business should be very pleased.”

November 30, 2011 - http://embassymag.ca/page/printpage/oil-11-30-2011

Scrap ‘ethical oil’ for ‘conscientious’ approach, Canada told

By Sneh Duggal

United States President Barack Obama’s move to delay the final decision on TransCanada Corp.’s highly controversial Keystone XL pipeline had some pronouncing the death of the “ethical oil” argument.

“Canada desperately needs a credible environmental message it can take to Washington. Counter-arguments about ‘ethical oil’ haven’t turned the debate in our favour,” wrote Fen Hampson, director of Carleton University’s Norman Paterson School of International Affairs, in an iPolitics column last week.

But is “ethical oil” really dead, and if so, just what would be that credible message?

The proponents of “ethical oil”—the idea that humanity is stuck in an oil-dependent world, and that the oil sector is mostly controlled by oppressive regimes, meaning that energy consumers are stuck with the choice between unsavory merchants and Canada—still say their message is solid.

They point out that the Harper government is sticking with the idea; several ministers, including Natural Resources Minister Joe Oliver, consistently call the oil sands an ethical source of energy.

But analysts say the pipeline delay proves the government, if it wishes to continue promoting crude from the oil sands to the Americans, can’t stick with “ethical oil,” and must craft a new message highlighting Canada’s democratic and environmental mechanisms.

Chris MacDonald, a visiting scholar at the University of Toronto’s Clarkson Centre for Business Ethics and Board Effectiveness, said that Canada will likely have to be more sincere. The country should play up the fact that it takes a “conscientious” approach to problem-solving, he said, and has governance structures and regulations in place.

“We’re a democracy with a vigorous public debate and civil society, and while we can’t claim to be free of problems on the environmental side or the human rights side, our trading partners ought to be reassured somewhat by the fact that we at least have the mechanisms in place by which we can plausibly deal with some of these situations,” he said.

“Other countries may not have this advantage.”

The advantage Canada has is not that its oil is “ethical,” he said, but rather that Canada can say it acknowledges the problems it has, it is working to make them better, and it has got the processes in place to do it.

The oil Industry, which unlike the federal government has been hesitant to embrace the “ethical oil” label, actually prefers this approach. Travis Davies, spokesperson for the Canadian Association of Petroleum Producers, said this is what their group has been doing.

“CAPP has been focused on delivering the message on performance for years now. Our entire goal has been to go out there and show, demonstrate if you will, that these improvements are being made, they’re being made by real people on the ground in Alberta and this is what they look like. And we think that that’s a very credible message to take to Washington,” he said.

For Paul Frazer, a former Canadian diplomat who is a Washington-based specialist in government relations, there is no one message that will work.

“Canada should presumably do everything it can to demonstrate not only to Canadians, but also to Americans that indeed, from a management perspective, from an environmental and from a scientific perspective, the government and industry can be and are at the leading edge of advances that will reduce greenhouse gas emissions, advances that will safeguard the environment whether that be water, air or land,” he said.

Alberta in particular has a good story to tell, he added, and part of any message has to be a multi-faceted effort to show what is happening in Canada.

“I think a message can be developed, but part of the message has to be that we’re not done yet,” he said.

“Progress is being made, that Canada hasn’t reached the end of the road on this.”

The other aspect is getting Canadians and Americans up to the oil sands. First-hand visits, he said, go a long way to help people understand what’s being done to ameliorate the situation.

Mr. Oliver’s office did not return requests for comment before deadline.

Proponents sticking with message

‘Ethical oil’ was an idea started by Sun News pundit Ezra Levant, who wrote a book in 2010 called Ethical Oil: The Case for Canada’s Oil Sands.

In an interview with Embassy, Mr. Levant said that despite the pipeline delay, the “ethical oil” campaign has not failed, and that the message is just beginning to propagate.

His idea was spread by Immigration Minister Jason Kenney’s former communications director, Alykhan Velshi, when he left his job and formed EthicalOil.org to defend Alberta’s oil industry. Mr. Velshi, however, has now landed a job in the Prime Minister’s Office, leaving EthicalOil.org to spokesperson Kathryn Marshall, a 24 Hours Vancouver columnist who has worked on political campaigns and at the Fraser Institute.

Ms. Marshall agreed with Mr. Levant that the message was just starting.

“I haven’t heard people really start talking about the ethics of oil yet,” she said.

“[Regarding] Keystone, for example, I didn’t hear people talking about human rights, or workers rights or peace and democracy. Once we start having that discussion, that’s what ethical oil is about, it’s about having discussions about the implications of where oil comes from.”

She also says Canada’s leaders need to tell the story of the country’s oil in the United States.

“That hasn’t really been done, and a big part of that story I think is the story about how we’re the most ethical producer of oil in the whole world,” she said.

Ultimately, Mr. Levant argues that the message should start with the oil companies themselves.

“They need to believe they are ethical. If not, they have to fix it. The first part is self-respect.”

editor@embassymag.ca

http://embassymag.ca/page/printpage/oil-11-30-2011

Below is an excerpt from the magazine’s piece featuring Paul.

“On the heels of Barack Obama’s election as president of the United States and amid an increasingly rancorous discourse around climate change and the oil sands, Premier Ed Stelmach decided to deploy a secret weapon: Paul Frazer. The long-time Washington lobbyist and former Canadian diplomat was hired in the spring of 2009 to promote the government of Alberta’s interests in Washington when it comes to energy and environmental policies.”

Those who receive this honor understand that public service can come in may forms. They demonstrate a commitment to seeking out informed opinions and thoughtful views. They inspire all of those around them to work toward common goals. Jean Charest has dedicated his career to do just that.

>>View the article

“Experts say [U.S. Ambassador David] Jacobson was acting on orders from Washington to send a message to Ottawa officials to calm them in a period of several trade issues cropping up at once—right before the 2012 US presidential elections.

“Paul Frazer, a former Canadian diplomat who is a Washington-based specialist in government relations, said he suspected someone told Mr. Jacobson to broadcast the idea that ‘we’ve got to get through this together.’

” ‘What the ambassador couldn’t say clearly and easily is that this is really the silly season in Washington, all sorts of things are going to happen, and things are going to be said, and initiatives will be prompted, all because the presidential election is underway,’ he said.”

View the full article

Watch the full report on CTV.ca.

“I suspect that both governments are interested in what is the ‘low-hanging fruit,’” wrote former Canadian diplomat Paul Frazer, now the Canadian Chamber of Commerce’s special adviser on Canada-U.S. relations in Washington, in a email. “In other words, what is more likely to be addressed soon and offer up some early, positive results.”

…

“But while the [Department of Foreign Affairs and International Trade summary] recommends working with the U.S. Food and Drug Administration to recognize Canada’s accreditation and certification systems, Mr. Frazer says the FDA might not have the staff or the budget to do the job on food safety that recent legislation asks it to take on.

As well, some issues appear to be sub-federal. The section on the shipping industry largely discusses the fact that the State of New York ‘implemented stringent ballast water management discharge standards that are more restrictive than necessary.’ Mr. Frazer contends that Washington may not be too inclined to get involved in such state-created issues.”

>>View Mr. Frazer’s comments and the full article

Read the release from the Wilson Center below:

The Canada Institute of the Woodrow Wilson International Center for Scholars and the Canadian American Business Council

present

Any Changes Coming? Implications of the May 2nd Canadian Federal Election for Canada and Canada-U.S. Relations

featuring

Antonia Maioni, Associate Professor and William Dawson Scholar, McGill University
Herb Metcalfe, Co-founder and Senior Partner, Capital Hill Group (Ottawa)
Tim Powers, Vice President, Summa Strategies Canada
Scotty Greenwood, Senior Advisor, Canadian American Business Council
Paul Frazer, Senior Advisor, 3 Click Solutions

Wednesday, May 4, 2011
9:00 a.m. – 11:00 a.m.
Woodrow Wilson International Center for Scholars
Moynihan Boardroom, 6th Floor
Washington, D.C.

Canadian opposition parties succeeded in bringing down Stephen Harper’s Conservative minority government in Canada in a vote of no-confidence on March 25, 2011. A federal election has been called for May 2 and its outcome could have ramifications on Canada’s foreign policy goals, and implications for its relationship with the United States.

Please join the Canada Institute and Canadian American Business Council for a discussion on the outcome of the Canadian election and what it means for the future direction of Canadian politics, Canada’s relationship with the United States, and what issues are likely to top the federal political agenda.

RSVP to Canada@wilsoncenter.org or 202-691-4302

Please allow extra time to enter the building. A photo I.D. is required for entry.

Directions at www.WilsonCenter.org/directions