Thank you for the opportunity to appear and discuss with you the Canada-United States relationship. As many of you probably know, the Canadian Council of Chief Executives has been a strong supporter for decades of efforts to make the border between Canada and the United States less rather than more of a barrier to both people and goods.
However, if you look back to the 1980s, in the days before the original Canada-U.S. Free Trade Agreement, the main goal at that point was simply to ensure better access for Canadian companies to the huge market to our south. Today, I'd suggest to you that the efficient flow of goods and services and of people between our two countries does more than give Canadians better access to the U.S. market. What it does is enable companies on both sides of the border to work together, as my colleague from the chamber said, to compete more effectively against the rest of the world, and particularly compete against some of the new emerging economic powers out there, like China and India, which are essentially transforming patterns of trade and investment around the world.
At the same time, the terrorist attack of 9/11 ushered in a new era in which security became the focus of public policy in the United States. Despite that, we had a recognition by decision-makers in both countries that economic security and physical security had to go hand in hand. That led initially, of course, to the smart border accord between Canada and the United States and a similar one between the United States and Mexico.
As we've gone on, since the past five years, we've really had to recognize that, as my colleague pointed out, while goods coming into North America face only a single customs inspection, goods that are produced within the continent often cross the border several times as they set a flow from raw materials through intermediate processing and eventually become finished goods. So every measure that adds to the cost or time to cross borders within North America amounts to a tax, a tax on enterprises in both our countries, a tax on jobs in our countries, and a tax on investment.
A clear understanding of this reality is essentially what led governments to agree to the security and prosperity partnership of North America at the 2005 summit of leaders in Texas. I think it's remarkable because there are two sides to the SPP. It is both a strategic, visionary document and at the same time a very pragmatic, practical one.
Strategically, the SPP recognizes that the growth of all three of our economies requires much stronger cooperation if we're to enable companies to continue to invest, create jobs, to build global businesses from bases in communities within our countries. But in a very practical way, it also recognized that there's no great appetite for another grand bargain on the trade front. On the other hand, there is room for a lot of progress in little ways.
The focus of the SPP on issues that can be addressed without the need for treaties or new legislation has led some critics to portray it as a kind of grand bargain in disguise, but the underlying principle of the SPP, I would suggest to you, is simply to encourage a common sense approach to deal in practical ways with practical issues that can help the economies of all three countries do better.
The initial SPP agenda included some 300 items. Many of these represent very small steps and individually won't make much of a difference. On the other hand, even 300 small steps, if we take them all, add up to a pretty giant leap for North America and without any need for a grand bargain.
When leaders met in Cancun last year for the first anniversary of the SPP, they recognized that more direct advice from the private sector would be helpful in driving progress on the measures that would actually make the most difference, be most effective in enabling North American companies to attract investment and create jobs. The result was the creation of the North American Competitiveness Council, the NACC, a trilateral advisory body made up of business leaders from all three countries.
The leaders decided that the NACC should function fully independently of governments and therefore requested NACC members to seek secretariat support from outside government. That was done in each country. My council is pleased to be acting, serving as the Canadian secretariat to the NACC.
Once the NACC had been appointed, it moved very quickly. By August last year, members had agreed to focus on three strategic priorities in their first year: border facilitation, regulatory cooperation, and energy integration. Over the next four months the secretariats consulted broadly across the business communities in all three countries. A draft report to ministers was ready by early December. That was hashed out in the final report, representing a strong consensus across the business communities of all three countries, and it was approved in January 2007.
The report makes a wide variety of recommendations, more than 50 in all. The section on border facilitation makes recommendations in four areas: emergency management, expansion of border infrastructure, the movement of goods, and the movement of people.
On the regulatory front, the report supports the goal of completing a North American regulatory framework agreement this year and makes specific calls for action related to food and agriculture, financial services, transportation, and intellectual property. In the energy section, the report calls for trilateral measures related to cross-border distribution systems, human resource development, and clean energy technologies as well as offering some thoughts on how Mexicans might work within their own country to accelerate development of their impressive resource base.
Across all three areas, the NACC also urged governments not to slip into reverse to allow borders within North America to become more rather than less of a barrier to goods or to people. It highlighted two specific issues. First was the impact of the United States western hemisphere travel initiative on the movement of people and the line-ups for passports that we've already seen at passport offices as a result, and also the new inspections and fees being imposed by the U.S. Animal and Plant Health Inspection Service, or APHIS.
The NACC presented its report to the responsible ministers from all three countries at a meeting here in Ottawa in February. It's a public report. It's available on multiple websites. I brought copies with me for every member of the committee, in case you haven't seen it yet. I just want to emphasize that it is public and has been public for months. I'm interested if there are any comments on that front.
I have to say the government is already taking action on these recommendations. The 2007 federal budget responded directly to two of those recommendations in particular. The first was the elimination of a withholding tax on cross-border payments of interest through the Canada-U.S. tax treaty. The second was expanded investment in new capacity at the Detroit-Windsor border crossing. My colleague has addressed that already.
We're also seeing progress on other issues, although it seems to be somewhat uncertain at times. I would like to suggest to you that the most critical one here is the pilot project for land preclearance. This is something that has been on the books since the original smart border accord. The notion of moving customs processing for commercial traffic away from the physical border is a critical step if we want to ease congestion at those major land crossings. My understanding was that, as of the beginning of this week, a whole host of contentious issues had been ironed out. We were down to a single issue, but we're at a make or break stage, and I am still awaiting information as we speak as to whether that's been worked out or not. I certainly hope so.
Mr. Chairman, I might just note here that my colleague from the chamber touched on a number of issues: emergency management, border infrastructure, the western hemisphere travel initiative, regulatory cooperation, intellectual property. These are not just important to Canadian businesses.
I think perhaps the most important contribution of the North American Competitiveness Council is that with its first report we now have a position that is the formal and public consensus of business communities across all three of our countries. In other words, the business communities of Canada, Mexico, and the United States have looked at where we can agree and where we can speak with one voice to our respective governments. We're hoping this has a positive effect in enabling our three countries to work together more effectively at the government level and to achieve the objectives that leaders have set for us.
The members of the NACC will be reporting formally to leaders ahead of the next North American summit, which is scheduled to be hosted this summer by Canada. As they move into the second year of their mandate, they will be considering further practical ways to help companies and communities across North America compete more effectively within the global economy.
Mr. Chairman, I will leave my opening remarks there and look forward to your questions. Thank you.