As you would know then, Mr. Chair, it's very difficult to drive a truck across this country, because you face different transportation regulations in every province. As a result of that, a great deal of our trucking goes through the United States. So yes, solving the interprovincial trade issue is extremely important, particularly now.
Let me make one very general comment about the direction of international business policy. This should not be driven by policy; it should be driven by where the business is. The business is within North America. Businesses are expanding elsewhere, but the diversification of our trade policy should be driven by where the business opportunities are.
The second thing is that I agree we need a very different approach within North America. We have to look at things like.... And this is outside of the NAFTA. We have to deal with this differently. Most of our commerce with the United States is problem free, but a great deal of the commerce between Canada and the United States, particularly on the part of small business, is not duty-free under the NAFTA. The administrative costs, the rules of origin, and the low tariff rates we already have make it far less costly for companies not to take advantage of NAFTA duty-free rates. They do that by paying the low tariff.
We have problems within the NAFTA around rules of origin, many of which are very restrictive. For instance, there is one manufacturer of equipment in Canada that is prevented from exporting duty-free into the United States because of very protective regulations written into the rules of origin--there is about one part in that machine that's manufactured in Europe. That doesn't make sense to me. That's the type of thing we should get rid of. We have to do that in negotiation with the United States.
Ben's point about regulation is right on. We have regulatory barriers within Canada. We should look at cases where we really have to be different and make sure we have effective regulations there. But in lots of areas, like the deodorant issue, I frankly don't see why we need different regulations in Canada. We have to look at that, but we have to do it on a targeted and case-specific basis. That means much more intense negotiations with the United States.
We're seeing a lot of restrictions right now in the American market, in the form of “Buy America” and procurement, and in the form of ITARs and the restrictions placed on people who can work in Canada's defence industry.
We're seeing the border regulations becoming more and more restrictive. I'm very concerned that these are becoming non-tariff barriers to our access to the U.S. market. The border issues are extremely important. We have to sort out the transportation infrastructure and the complexity of the regulations around the border.
All of that is important. A lot of this is being negotiated within the context of the security and prosperity partnership, and we have to make sure we take a leading position in that. My feeling is that Canada is following right now. We should be much more aggressive.
The other comment I would make about North America, though, is that when we look at issues in Canada and the United States, we tend to look at bilateral or trilateral issues within the NAFTA. The fact of the matter is that North America has some very common competitiveness issues they have to deal with if they're going to be competitive globally. Everybody has common issues across North America in terms of upgrading the skills of our workforce, in terms of improving productivity, and in terms of making sure we have the type of investment systems that are necessary to grow. We're facing challenges, globally, from Asia and from other markets. Unless we as North Americans get our act together, it will make it very difficult for us to compete.
With respect to the other part of our negotiations with the United States, I think it's not just these bilateral issues, but common North American issues, where we can develop common policies. Unless Canada takes the lead in doing this, we're going to be followers, and we're going to lose.