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

UNCLAS SECTION 01 OF 05 OTTAWA 001385 
 
SIPDIS 
 
STATE FOR WHA/CAN:TBREESE, AHOLST; WHA/MEX: EMRICH; 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 
TREASURY FOR WILBUR MONROE 
EPA FOR PETE CHRISTICH 
HOMELAND SECURITY OFFICE OF THE SECRETARY (MARMAUD, 
MARTINEZ- 
FONTS) 
USDOC FOR 4320/ITA/MAC/WH/ONIA (WBASTIAN, ARUDMAN, GWORD) 
 
E.O. 12958: N/A 
TAGS: ECON ECIN EFIN CA
SUBJECT: SPP IN CANADA: THE PROSPERITY AGENDA 
 
REF: A. OTTAWA 1364 (SPP MID-TERM UPDATE) 
     ¶B. OTTAWA 1315 (SPP: CANADIAN CHEMICAL PRODUCERS) 
     ¶C. OTTAWA 1201 (SPP: CANADIAN-AMERICAN BUSINESS 
        COUNCIL) 
     ¶D. OTTAWA 1199 (SPP PMO-OMB INSTITUTION) 
     ¶E. OTTAWA 1104 (SCENESETTER: CANADA AND THE SPP) 
     ¶F. TORONTO 1053 (INTERPROVINCIAL TRADE BARRIERS) 
 
¶1. Summary:  Following are Mission's general comments on the 
areas covered in the SPP declaration.  Mission Canada 
recommends that Washington agencies focus on the following 
overarching elements for progress in SPP: 
 
--  a permanent dialogue between the two executive bodies 
charged with regulatory oversight, OMB in the United States 
and Canada's Privy Council Office (PCO). 
 
-- an independent business-driven mechanism to identify key 
regulatory barriers (ref Ottawa 1199). 
 
--  expansion of the North American Steel Trade Committee 
(NASTC) and extension to other sectors, with the objective of 
creating a forum where producers on both sides of the border 
would eventually be willing to address trade disputes early. 
 
 
-- a broader approach to infrastructure investment to include 
the possibility of private investment, and consideration of 
various modes of border crossing, in particular an increase 
in short-sea shipping across the Great Lakes. 
 
These ideas and other comments below are keyed to the outline 
of the Prosperity Agenda that was publicly released on March 
23, 2005.  We will continue to provide comment and status 
reports as the SPP evolves. End Summary. 
 
Regulatory Cooperation to Generate Growth 
------------------------------------------ 
 
¶2. We are very pleased to see the SPP build upon existing 
partnerships such as the Four Corners Agreement in the 
chemical substance domain, NORAMET in the area of measurement 
standards, and the NAFTA automotive and trucking committees. 
 In order to reduce regulatory barriers between Canada and 
the United States, we also strongly recommend that we create 
an enduring linkage between government regulatory oversight 
bodies in OMB and Canada's Privy Council Office (PCO).  In 
the medium to long term, the two bodies could work together 
to review new regulatory initiatives, review existing 
regulations to identify areas for revision or revocation, and 
identify emerging areas for regulatory cooperation, e.g. in 
new technologies. 
 
¶3. We also recommend that we encourage business on both sides 
to cooperate to set regulatory priorities.  One 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 and the Canadian 
Council of Chief Executives, are already reaching out to 
their U.S. counterparts (ref Ottawa 1315), but our experience 
suggests that this process is uneven across industries and 
could benefit from a push by the two governments. 
 
 
Sectoral Collaboration to Facilitate Business 
-------------------------------------------- 
 
¶4. Some SPP suggestions include reference to building on the 
North American Steel Trade Committee (NASTC) as a forum to 
address common issues on a North American basis.  We support 
the SPP proposals to expand this model to other sectors, 
including autos, with the hope that industry councils could 
help resolve some of the issues that currently lead to 
dumping and subsidy cases as well as address regulatory 
issues. 
 
Strengthen North America's energy markets 
---------------------------------------- 
¶5. We continue to have reservations about including certain 
issues in the area of energy.  Although there has been a 
recommendation that, under SPP, we should work to facilitate 
greater production of the Canadian oil sands, we do not see 
an advantage in government involvement in this area.  Some of 
the world's best energy companies have invested and continue 
to invest heavily in achieving these goals, and they are 
doing so under relatively free market conditions without 
barriers to the transfer of technology and while complying 
with Canadian environmental requirements.  Inclusion as an 
SPP goal seems to imply that this situation is inadequate, 
whereas in fact the situation currently is a model of private 
industry achievement.  For the same reason, the previously 
stated goal that SPP should enhance oil production from 
mature fields by encouraging oil and natural gas technology 
partnership is unnecessary, particularly at a time when high 
oil prices are driving private firms to make even further 
refinements in these already sophisticated techniques.  Also 
in the energy section, we would like to point out that any 
inclusion of a goal to increase electric power distribution 
and transmission system efficiency and reliability is already 
a high-level issue (it was a core concern of the National 
Energy Policy Report of May 2001), and during the past four 
years all of our interlocutors have repeatedly stressed that 
a key obstacle to progress has been the need to await 
anticipated U.S. federal energy legislation.  The goal of 
increasing electric power distribution and transmission 
system efficiency and reliability is an important one; 
however, it may not be the best fit under the SPP program, 
which is intended to focus on solutions that do not require 
legislation. 
 
Improve the safety and efficiency of North America's 
transportation system 
--------------------------------------------- ---------- 
 
¶6. Certainly the most consistent message we hear from our 
industry contacts is that, on the Canadian side, border 
infrastructure is the major bottleneck.  Thus building new 
border infrastructure is critical, and the involvement of 
private sector players is crucial; but this involvement must 
include not only private infrastructure owners (e.g. 
Ambassador Bridge) but also the private sector users of 
border infrastructure who might be inclined or induced to 
invest their own funds into specific border infrastructure 
such as FAST approach lanes (such a private sector-funded 
approach lane has been built on the Mexican-United States 
border).  (Comment:  Industry analysts have explained, 
however, that private ownership of major infrastructure can 
be problematic when it creates monopoly-like situations and 
complicates expansion.  Careful agreements between private 
and public stakeholders would be critical to take full 
advantage of private-public partnerships.  End comment.)  In 
addition, the use of alternative modes of transport should be 
given a higher profile as a means to expand cross-border 
capacity.  For example, existing rail crossings can provide 
significant extra capacity for cross-border movement of goods 
at much less cost than building new bridges and highways.  In 
addition, the use of short-sea shipping has been given short 
shrift as a legitimate alternative that could alleviate 
border congestion, and it deserves full scrutiny.  We should 
consider how to bring together CBP, Border Patrol, USDOT 
(including MARAD), USCG, Treasury, State, and to draw on 
input from the private sector. Such a grouping could identify 
obstacles to investment and activity in this sector (whether 
legislative, financial, or other obstacles); it will be 
necessary to consider the Great Lakes separately from 
coastwise trade as a distinct area of operations with 
potentially unique problems.  Canada and Mexico could also do 
a similar internal assessment: the analysis would feed into a 
trilateral short sea shipping working group.  This effort 
builds on the existing trilateral MOU (August 2003) on 
short-sea shipping to have each of the three partners 
identify obstacles to more effective use of marine 
transportation and undertake an effort to remove these 
obstacles. 
 
Efficient provision of financial services throughout North 
America 
--------------------------------------------- -------------- 
 
¶7. The already-effective trilateral financial services 
coordination is being folded into the SPP umbrella.  Public 
outreach is underway. 
 
Efficient Movement of Goods 
---------------------------- 
 
¶8. The existing NAFTA Working Group on Rules of Origin is 
making good progress on reducing rules of origin costs on 
goods traded between our countries.  No new group is needed 
to address this item, as the NAFTA Working Group has ample 
experience and an already-strong mandate. 
 
Efficient Movement of People 
---------------------------- 
 
¶9. Unfortunately, the timing of the Western Hemisphere Travel 
Initiative (WHTI) has not been conducive to progress in this 
area.  Canadians in general feel that the WHTI, which could 
require passports for all people entering into the United 
States, including American and Canadian citizens, will impede 
free travel across the border.  While waiting for a final 
decision on the WHTI, Mission posts are engaging Canadian 
interlocutors to explain the security implications of the 
WHTI and to solicit comment on various options that would 
both ensure security and encourage efficient movement of 
people.  Although the efficiency benefits of having a single 
document for border officials to check (such as passport) are 
obvious, many Canadians and Americans who regularly cross the 
border do not have a passport.  Moreover, Canadian observers 
inform us that the Canadian passport system is unwieldy: a 
Canadian passport is good for only 5 years, costs about 100 
CND, and requires substantial documentation to renew.  If an 
alternative secure document is chosen under WHTI, it should 
be more convenient and valid for a longer period of time. 
Canadian industry interlocutors have suggested that the ideal 
identification would not be a bulky and expensive passport 
but instead some form of expanded NEXUS card system. 
Expanding FAST and NEXUS would benefit frequent border 
crossers as well as occasional travelers.  Online NEXUS 
applications would be helpful for people who live far from 
the border. 
 
 
Joint Stewardship of our Environment 
----------------------------------- 
 
¶10. Cross-border environmental disputes such as Devils Lake 
and Teck Cominco's pollution of the Upper Columbia River have 
been among the most difficult and intractable issues between 
Canada and the United States in recent years.  While the 
International Joint Commission (IJC) remains a respected 
institution and credible arbiter in both countries, parties 
to some disputes have been unwilling for various reasons to 
refer disputes to the IJC for study and recommendations. 
While it is undoubtedly useful to maintain some flexibility 
in how to deal with particularly sensitive disputes, we 
believe both countries would benefit from a more structured 
bilateral forum or mechanism for raising such issues, 
determining the facts and establishing an appropriate venue 
and method for resolution.  Rather than continue to deal with 
these cross border disputes on an ad hoc basis, we should 
explore with the Canadians the creation of a means that would 
provide not a certainty of outcome, but rather a certainty 
that disputes would be dealt with in a timely, transparent 
and scientific manner, with an IJC reference being one of 
several possible outcomes.  The Boundary Waters Treaty is 
almost 100 years old and may well need an overhaul to make it 
more relevant in the current policy and political 
environment. This would not be a short-term deliverable and 
may raise concerns among those who are frustrated by lack of 
progress in the above issues, but it could be a way forward 
to better manage our bilateral relations over the longer term. 
 
¶11. In the same vein, we believe that the establishment by 
both countries of contingency funds for IJC references would 
make the IJC a more attractive option for resolution of 
disputes, speeding the process and reducing uncertainties 
about how to pay for references on priority issues. 
 
¶12. Air Quality:  The United States and Canada have been very 
successful in efforts to improve air quality.  Reductions in 
SOx and NOx have been particularly important in that effort. 
Based on the last bilateral air quality meeting, we believe 
the time is right to move ahead rapidly on an annex for the 
reduction of particulate matter. 
 
¶13. Water Quality: The Great Lakes Water Quality Agreement is 
arguably the most important agreement we have on water 
quality.  It covers the world's largest bodies of fresh 
water.  Both the United States and Canada have had problems 
getting adequate funding for the agreement review that is 
supposed to be conducted this year.  There should be a strong 
push to fund and conduct the review and provide for 
aggressive measures to address water quality problems in the 
Great Lakes. 
 
¶14. Invasive Species: There has been good progress on 
invasive species cooperation with Canada.  Bilateral meetings 
have improved communication between U.S. and Canadian 
officials and given them a better understanding of the 
mechanisms available in each country to address invasive 
species problems.  While there are many areas in which 
further progress could be made, we recommend particular focus 
on addressing the introduction of invasive species in the 
Great Lakes and coastal waters through ballast water. 
Neither country was satisfied with the standards on ballast 
water adopted by the International Maritime Organization's 
(IMO) agreement.  The United States and Canada should move 
quickly to begin talks on establishing "regional" ballast 
water standards that better reflect our concerns. 
 
¶15. Biodiversity: Canada has proposed the reactivation of the 
International Porcupine Caribou Board, something the Canadian 
goverment has been pushing for several months.  Their 
interest in this body is no doubt the result of their 
well-known objections to U.S. drilling for oil and gas in the 
Arctic National Wildlife Refuge.  Consideration of this 
proposal should be coordinated with the energy working group. 
 
¶16. Oceans: The United States and Canada have both proposed 
goals related to Global Earth Observations.  We heartily 
endorse this issue for priority attention, particularly given 
its connection to climate change issues and the potential for 
improving weather forecasting. 
 
Create a Safer and More Reliable Food Supply while 
Facilitating Agricultural Trade 
--------------------------------------------- ------------- 
 
¶17. We believe that the objective of pursuing enhanced food 
safety and dealing with foodborne, animal and plant disease 
hazards are presently addressed to some degree between the 
partner governments utilizing various fora established in 
treaties, MOU'S, trade agreements, and participation in 
international standard setting bodies. Key to meeting 
timeframes established for the multiple objectives is a 
strong buy-in by targeted federal/state/provincial agencies 
to meet objectives.  The groundwork for many of the 
objectives has already been laid, and now it is up to 
government leaders to provide the leadership and resources to 
accomplish the task. 
 
Protect Our People from Disease 
------------------------------ 
 
¶18. We are strongly supportive of the entire agenda laid out 
for the Health Working Group; indeed, harmonization of 
regulatory requirements for pharmaceuticals is a promising 
area to achieve significant economic benefits for North 
America, and addressing the health needs of indigenous 
peoples is laudatory.  With respect to enhancing public 
health cross-border coordination we point out that it will be 
essential to determine if the current Canada-United States 
agreement on "Comprehensive Civil Emergency Planning and 
Management" needs any amendment or annexes to facilitate 
cross-border coordination on public health emergencies.  It 
must be noted also that provincial and state and even local 
public health authorities have significant, often even 
principal, roles in managing public health and animal health 
crises. The objectives should explicitly recognize that 
provincial and state stakeholders must be engaged as well as 
federal players. 
 
Visit Canada's Classified Web Site at 
http://www.state.sgov.gov/p/wha/ottawa 
 
DICKSON