Since Canada is a trading nation, it seems reasonable that our government should work towards creating an environment that allows Canadian businesses to import or export goods with relative ease and a minimum of bureaucracy, especially with our largest trading partner and next door neighbour, the United States.

That’s exactly the idea behind the Security and Prosperity Partnership (SPP) launched by the United States, Canada, and Mexico in March 2005. The SPP has the potential to advance Canada’s national interest in modest steps by reducing non-tariff barriers to trade and making the necessary implementation of post 9/11 security provisions bilateral and thus more efficient.

Among the potential benefits are reductions in transaction costs, less regulatory duplication, continued investor confidence in Canadian manufacturing plants, and a more competitive production process for intra-firm trade across the border. While the leaders meet once a year (Cancun in 2006, Montebello in 2007) to set overall goals, technocrats with advice from business leaders hammer away at what David Emerson, Canada’s minister of international trade, has called the “tyranny of small differences.”

But despite this promise of improved trade and cooperation among neighbours, SPP has fallen victim to myths and conspiracy theories.

On the Canadian side, nationalists in the Council of Canadians believe that the United States is using this channel to encroach on Canadian sovereignty and gain access to such resources as water. On the American side, several news programs such as ‘Lou Dobbs Tonight’ and the John Birch Society are calling the SPP a secret government-to-government plan to form a North American Union akin to the European Union. Several U.S. State legislatures have passed so-called anti-North American Union resolutions condemning the SPP. The wild claims on both sides of the border are putting a political chill effect on the talks, especially as elections draw near in the U.S. and in Canada.

This is a pity because regulatory and security harmonization with the U.S. is exactly what the Canadian economy needs. The high price of the dollar and the growing web of security procedures at the border are impacting certain Canadian export industries.

Like the Free Trade Agreement, the SPP will generate growth in the Canadian economy by lowering the overall cost of production in the integrated Canadian-American manufacturing sectors. Because Canada is the bigger exporter in the Canada-U.S. trade relationship, Canadian business people bear the brunt of the current Canada-U.S. cross-border cost in terms of profitability.

The SPP is ‘smart’ for various reasons: First, it avoids the problem of negotiating and ratifying another treaty. With the U.S. Congress leaning toward more protectionism, the Bush administration and even its successor will face long odds on Congressional approval for such a treaty.

Second, the SPP reflects the fact that national security issues impact negatively on trade and that trade and security should be linked to streamline low risk movement while working together to identify high-risk traffic.

Third, though all three North American countries are involved, the partnership allows Canada and the U.S. to work together on a faster pace inside the triangle. Fourth, it draws the right lessons from the European experience. It avoids EU-like supra-national political structures while gradually moving towards harmonization in regulations and a single market for goods and services.

Most importantly, the partnership allows practical progress exactly where it matters for Canada. For example, officials are looking for ways to set up a single security and customs inspection for Asian containers that arrive in Canadian ports but are bound for U.S. cities. They are also coordinating preventive measures so that a food or disease problem does not automatically close the border.

SPP tries to find innovative ways to reduce truck line ups on the Ambassador Bridge and other busy border crossings. Another area of work is finding compatible pipeline and environmental standards so Canada’s oil and gas exports can continue to grow. Negotiators are finding ways to limit costly rules of origin paperwork that exporters have to submit when part of the product is not made in North America. SPP also looks at the future. E-Commerce is only a small part of trade now but common rules are needed to lower costs and protect privacy.

Unfortunately, ordinary Canadians aren’t hearing about the benefits of SPP; instead they’re subjected to the shrill rantings of the usual anti-American suspects.

It’s time for government to show there’s nothing to fear from the SPP. The Canadian government can raise the profile and reduce the paranoia about the SPP by offering to make its rule making and standard setting processes open to consultation with the U.S. at an early stage and persuade the American government to reciprocate.

Additionally, both the government and private sector should think about giving more room to achieve SPP goals through private sector initiative, for example in the areas of setting and coordinating standards, pre-screening on security, as well as electronic reporting and custom self assessment on borders. The role of government can then be reduced to supervising market-based regulations, and focusing on threats and high-risk border traffic.

At the end of the day, SPP is about improving trade, growing the Canadian economy, and creating employment opportunities. What is there to fear?