Think Tank Calls For Comprehensive Integration Between Canada And U.S.

The Gazette
Posted : 2007-07-10

A Conference Board of Canada report says the country needs to integrate its economy even further with the United States and among Canadian regions, if it is to overcome issues of lagging productivity and income growth.

Glen Hodgson, chief economist for the Conference Board, said in the report issued yesterday that while macroeconomic measures of Canada's performance - such as gross domestic product growth, government fiscal performance, exports and employment - are strong, microeconomics such as productivity and real income growth trail that of other economically advanced countries.

To counter Canada's struggles with productivity and income growth, Hodgson said barriers to trade, investment and labour mobility between provinces should be removed to create a "single Canadian market."

The Trade, Investment and Labour Mobility Agreement between British Columbia and Alberta is cited as a model that should be followed throughout Canada. As for international trade, the report said there is no viable alternative to the U.S. as Canada's biggest economic partner.

However, Hodgson said the limit has been reached in how much the current free trade agreement between the two countries can benefit Canada.

Hodgson suggested taking Canada's economic relationship with the U.S. to the next level. This includes joining the Americans in bilateral trade agreements with other regions and countries.

Since the North American Free Trade Agreement - which includes Mexico - Canada has signed only three bilateral trade pacts and the U.S. has signed 13, and he noted that Canada risks economic marginalization if this trend continues.

The chief economist also suggested that Canada put more investment into border-security technology and infrastructure in ways that balance trade and labour mobility with security.

Hodgson also said "Canadian foreign policy with the United States should be geared to creating the right negotiating environment (for economic agreements). A positive political relationship at the highest levels of government, for instance, was critical to the successful negotiation of the initial FTA."