This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 OTTAWA 001199 
 
SIPDIS 
 
STATE FOR WHA/CAN:TBREESE, AHOLST; EB/PDAS Donnelly 
 
WHITE HOUSE/NSC FOR FARYAR SHIRZAD, DEL RENIGAR 
 
WHITE HOUSE/OMB/OIRA FOR JOHN MORRALL III 
 
STATE PASS USTR FOR SAGE CHANDLER 
 
USDOC FOR 4320/ITA/MAC/WH/ONIA (WBastian, ARudman, GWord) 
 
E.O. 12958: N/A 
TAGS: ETRD CA
SUBJECT: SPP Institution Building: Regulatory Cooperation 
and Business Dialogue 
 
Ref:      (A) Ottawa 1104 (Scenesetter: Canada and the SPP) 
 
     (B) Ottawa 3431 (December 2004) 
 
¶1. Summary: This is the second in a series of cables 
discussing the background and possible future course of the 
Security and Prosperity Partnership (Ref A).  Summary: As 
SPP working groups move through the first phase of reaching 
out to stakeholders and identifying key issues, we recommend 
that Washington propose institutional links that will give 
continuity to the process without creating a new 
bureaucracy.  On the government side, SPP deliverables could 
include a commitment to a permanent dialogue between the two 
executive bodies charged with regulatory oversight, OMB/OIRA 
in the United States and the GoC's Regulatory Affairs 
(RAOIC) group in the Privy Council Office (PCO).  This 
linkage could yield an enduring relationship, similar to the 
Canada-United States Smart Borders effort that has 
effectively managed border security.  Another key element, 
in our view, is an independent business-driven mechanism to 
identify key barriers and highlight business priorities for 
officials.  Some Canadian industry groups are already 
seeking a cross-border approach; we should encourage key 
industries and companies to take ownership of the process 
and present regulators with a common set of priorities.  End 
summary. 
 
¶2. BACKGROUND: One objective of the SPP Prosperity Agenda is 
to " Strengthen regulatory cooperation, including at the 
onset of the regulatory process, to minimize barriers."  In 
its Smart Regulations intiative (Ref B), the GoC has already 
clearly expressed its willingness to address the "tyranny of 
small differences" that inhibits trade and reduces consumer 
choice on both sides of the border.  The recent External 
Advisory Committee on Smart Regulation noted that "Canada 
and the United States maintain parallel processes and 
structures across almost all areas of regulatory activity. 
Their two sets of processes reflect a convergence in policy 
objectives and regulatory procedures. However, much of this 
work is duplicative, particularly given the integrated North 
American market." 
 
¶3. The Advisory Committee recommended that Canada-specific 
regulatory requirements should differ from International or 
North American models only where there are important 
national priorities, unique Canadian conditions or 
Constitutional issues, or existing models are inadequate to 
Canadian policy objectives; and that Canada should promote 
joint product reviews and move toward accepting U.S. and EU 
product approvals in sectors with well-established 
conformity assessment procedures (Reftel). 
 
¶4. Building on the Advisory Committee report, the GoC 
released its Implementation Strategy for Smart Regulation 
effort on March 25, 2005, which calls for increased 
cooperation with the United States to reduce regulatory 
mismatches. 
 
Smart Borders, Smart Regulations, Smart Markets? 
--------------------------------------------- --- 
¶5. SPP provides the opportunity to establish a mechanism for 
managing this cooperation, perhaps even within the initial 
90-day window.  In our view the logical first step toward 
reducing regulatory barriers in the long term is to open 
direct links between the two governments' bodies for 
managing regulation, the OMB's Office of Information and 
Regulatory Affairs (OIRA) and the Canadian PCO's office of 
Regulatory Affairs and Orders in Council (RAOIC).  The two 
oversight bodies could work together to set timetables and 
jointly review existing regulations to identify regulations 
that should be harmonized, eliminated or be candidates for 
mutual recognition agreements. U.S. officials could also 
share experience on strengthening regulatory oversight and 
interagency coordination, a process that could also include 
Mexican experts. 
 
¶6. A long-term bilateral dialogue among regulators could 
become the regulatory counterpart to the successful Canada- 
United States "Smart Borders" effort, which includes a 
detailed action plan that identifies and monitors, and to a 
lesser extent prioritizes, bilateral actions on border 
security and trade facilitation.  Like "Smart Borders", if 
successful the regulatory dialogue could add momentum to the 
regulatory agenda without imposing a permanent secretariat 
or another layer of bureaucracy. 
 
¶7. The agenda of these OMB/PCO bilaterals might include 
review of existing promising models, such as the joint 
Canadian (PMRA) and U.S. (EPA) pesticide review process, and 
a look at sectors identified for priority action in the 
Smart Regulation report such as some aspects of drug 
approvals, processed food containers, and 
federal/state/provincial regulatory requirements for 
construction products.  Annual meetings of the oversight 
bodies as part of the existing SPP workplan could create 
additional pressure for resolution of existing items and 
build an agenda for long-term work, but could also create a 
useful umbrella for highlighting our many existing cross- 
border cooperative efforts between individual agencies. 
 
¶8. Washington agencies are currently exploring how to 
involve business and other stakeholders in this process. 
Options include expanding the Canadian approach to convene 
North American "SWAT teams" of government, industry and 
consumer representatives that review regulatory issues by 
sector and report back to governments.  Another, simpler 
model might be a North American equivalent of the 
"Transatlantic Business Dialogue (TABD)" which effectively 
articulated business priorities for US-EU regulatory 
cooperation in the 1990s.  Under this model, governments 
would ask business on both sides of the border to work 
together to come up with a consolidated list of high- 
priority standards barriers and other regulatory issues, 
thus eliminating the impression that addressing certain 
regulatory barriers is a "win" for one side or the other 
rather than broadly beneficial to both economies. Some 
Canadian stakeholders, such as the Canadian Manufacturers 
and Exporters Association, are already reaching out to their 
U.S. counterparts (septel), but our experience suggests that 
this process is uneven across industries and could benefit 
from a push by the two governments. 
 
¶9. Under this framework we could call on industry and 
regulatory officials to reach certain objectives within set 
timelines.  For example in June the leaders could call on 
industry associations to begin work on a joint list of 
barriers to trade; in the 6-12 month timeframe industry 
associations would report to PCO/OMB their priority list of 
regulations to review. 
 
Dickson