The new perimeter initiative: will security trump trade? The tyranny of the "or" and the genius of the "and.".

• Author: Johnston, Kelly D.
• Position: 35th Annual Henry T. King Conference: The US-Canadian Border Action Plan

When it comes to the latest initiative on improving security and trade in North America, many remember Yogi Berra's famous line, "It's deja vu all over again." (1) Those of us who have been involved in various initiatives over the years to improve United States-Canada cross-border trade and security, especially since September 11, 2001, have plenty of reasons to be cynical about the eventual success of anything that purports to improve both security and trade.

That is because just about every initiative of this nature is robbed of the genius of the "and," only to be replaced by the tyranny of the "or." (2) The most recent example is the Security and Prosperity Partnership of North America ("SPP"), launched in 2005 by President George W. Bush, Mexican President Vicente Fox, and Canadian Prime Minister Paul Martin. (3) Its premise was not unlike today's bilateral Beyond the Border Action Plan ("BTB"), launched on December 7, 2011 by President Barack Obama and Prime Minister Stephen Harper, which laid out an aggressive plan to create a North American security perimeter by making the border more efficient and enhancing regulatory cooperation between the countries. (4)

A brief history lesson is in order. The SPP was launched with much fanfare in March 2005 as part of a trilateral meeting of the three national leaders, (5) followed shortly by a hastily-arranged meeting of business groups with then-United States Secretary of Commerce Carlos Gutierrez to quickly solicit ideas on the kinds of trade-related reforms and initiatives they should consider. (6) Many United States federal cabinet agencies were represented, and the group was overwhelmed with a reported three hundred submissions from the private sector. (7)

Following a ministerial-level meeting of the three countries in June 2006, they launched the North American Competitiveness Council ("NACC"), which was tasked with prioritizing the ideas into a more achievable set of recommendations. (8) The ministers said in their announcement, "[t]he purpose of governments is to create the environment necessary for business to prosper. Thus far, the NAFTA has worked well, but it can work better--the NACC will help in that endeavor and the governments look to the private sector to tell them what needs to be done." (9) A year later, the NACC, which consisted of thirty private sector and non-profit business entities equally divided between the three countries, (10) narrowed its list of priorities down to fifteen. (11)

Why did companies care so much about United States-Canada cross-border trade? As former Canadian Ambassador Michael Wilson once said, "we make things together." (12) In the case of my employer, the Campbell Soup Company, Canada is our largest export market, and the reverse is also true for our subsidiary, the Campbell Company of Canada. (13) In all, some seven thousand Campbell shipments crossed the United States-Canada border in 2011, with eighty percent of it being intra-company--our example is not unique. (14) While we have never quite quantified it, the cost of complying with different regulatory requirements and regimes, what I have referred to previously as "the tyranny of small differences," (15) is significant.

The number of these recommendations that were actually enacted remains in dispute, although it is safe to say it was not very many. While the NACC had a much-heralded meeting with the three national leaders at the Montebello resort in Quebec in August 2007, (16) both the NACC and the SPP ceased to exist in early 2009 following the presidential election in the United States. (17) It did not help matters that both Canada and Mexico also changed leaders in the interim, (18) which helped slow the momentum that the private sector had brought at first to the ambitious initiative.

The lessons of the SPP's demise became clear over time. Most notably, "Security" and "Prosperity" were handled as completely separate initiatives. The security aspect was led in the United States by then-Department of Homeland Security ("DHS") Secretary Michael Chertoff, while Secretary Gutierrez led the trade component. (19) Given the lack of senior White House leadership for the initiative during the final two years of the Bush Administration, the lack of coordination even support for the initiative between the two cabinet agencies was all too evident. (20) In addition, industry efforts to persuade the DHS to pursue certain reforms, such as expanding "pre-clearance" to include "trusted shippers," not just airport travelers, was met with enormous resistance. (21) Cabinet agencies became veritable graveyards where good ideas from the NACC went to die. Bureaucratic resistance to the SPP and the NACC amidst federal agencies in the United States and Canada was increasingly the norm. (22)

Other aspects doomed the SPP...