The Emergence of Cross-Border Regions Between Canada and the U.S.

The Canada Institute at the Woodrow Wilson Center and The CSIS Smart Border North Working Group

Washington, D.C., May 23, 2006 www.policyresearch.gc.ca Focus of presentation

1 Methodology

2 Research Findings

3 Key Characteristics of CBRs

4 Common Opportunities and Challenges

5 Considerations for Public Policies Why this Project?

• Little attention paid to regional/sub-national dimensions of Canada-U.S. relationship

• Broadening and deepening of regional linkages make research essential

• How can the Government of Canada maximize opportunities from NA regional integration? Background

At the outset, we must note:

• Geography, history and demography have played an instrumental role in helping to shape and set the stage for the cross-border regional linkages we see today. Background Shared Geography

Great Plains Great Lakes

Yukon River Souris River Basin Red River Basin Nooksack River

Rocky Mountains

St. Lawrence River C

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s Lake Champlain

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a Pacific Coast n Gulf of Maine g

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. in ta n u Pujet Sound o } M Georgia Strait n Atlantic Coast : ia h Cascades c la Columbia River a p p A Background Shared Historical Contexts

Oregon Territory: , pre-1846 N ew (US and Britain) fou ndl and

c e b e u Q . East Coast,: pre-1776 (Britain) : Definition So, what is a Cross-border Region?

• A Cross-Border Region:

– Group of province(s)/states – Straddle the border – Critical mass of economic and organizational linkages, and cultural similarities

• Boundaries can vary depending on the criteria or indicator used Methodology Three Lines of Research

The Economy

Socio-Cultural Values

Cross-Border Organizations Methodology Three Instruments

Research and Analysis • Measure economic linkages • Evaluate socio-cultural similarities • Document cross-border organizations

Leader Survey and Executive Interviews (110 leaders) • Identify Canadian and American stakeholders • Enhance understanding of linkages • Assess opportunities and challenges

Six Regional Roundtables (~ 200 leaders) • Review research findings • Discuss regional initiatives and lessons learned • Examine implications and roles for the Government of Canada Leader Survey

Participating Organizations Government

Associations Executive Council – Gov’t of AB Alberta Economic Development Calgary Economic Development Research

Western Centre for Economic Research Business Canada West Foundation

BC/Washington Environmental New Brunswick Ministry of Cooperation Council Intergovernmental and City of Seattle International Relations International Mobility US Consulate in Toronto and Trade Corridor Ontario Ministry of Economic Development and Trade Pacific NorthWest Economic Region Atlantic Institute for Market Studies Idaho Department of Commerce Atlantic Provinces Western Governors’ Association Chamber of Commerce Regina Chamber of Commerce Canadian-American Center Saskatchewan Trade and Export Partnership Gulf of Maine Council for Manitoba Ministry of Intergovernmental the Marine Environment Affairs and Trade Vermont Agency of Commerce North Dakota Economic and Community Development Development and Finance New England Governors’ Conf. New England – Canada Food and Agricultural Policy Research Institute Business Council CSG – Eastern Trade Council Council of Great Lakes Industries Institute for International Economics Institute for Competitiveness Canadian Institute – Woodrow and Prosperity Quebec -New York Wilson International Center Centre on North American Corridor Coalition for Scholars Politics and Society I –94 International Trade Alliance Regional Roundtables Six cities

Sackville,Ottawa,VancouverWinnipegWaterlooMontreal ON NB NovemberFebruaryMarch 7,3, 16,14,28,23, 2006 20062005 The Economy Evidence on Cross-Border Links

In border areas, Canada-U.S. economic activities are stronger and more involved The Economy Evidence on Cross-Border Links

Canadian Trade Flows Adjusted for Size of State (GSP)

New Hampshire Massachusetts Rhode Island Connecticut New Jersey Delaware Maryland

Trade Levels Trade Growth 2004 1992-2004

Top-Third Top-Third Mid-Third Mid-Third Low-Third Low-Third The Economy Evidence on Cross-Border Links

Canadian-owned Establishments Adjusted for Size of State (GSP)

New Hampshire Massachusetts Rhode Island Connecticut New Jersey Delaware Maryland D.C.

No. of Establishments Growth 1997 1987-97

Top-Third Top-Third Mid-Third Mid-Third Low-Third Low-Third The Economy Evidence on Cross-Border Links

• We focus on four economic factors:

Bilateral Trade Trade Breadth Trade Volume 3 Growth Provincial 11 Intensity 22 3 44 Exports

• We find provincial-state groups: • fairly distinct • increasingly important • quite dynamic The Economy The West Bilateral Trade Trade Breadth 1 Trade 2 Volume 3 Growth 4 Provincial 1 Intensity 22 33 44 Exports

BC Alberta 1234 1234 Alaska Wyoming Washington Montana Oregon Washington Idaho North Dakota North Dakota Minnesota Montana Illinois Arizona Iowa Vermont Vermont Hawaii Tennessee Nevada Idaho

Top 5 Top 10 The Economy Alberta also part of Prairies-Great Plains Bilateral Trade Trade Breadth 1 Trade Volume Growth 4 Provincial 1 Intensity 22 33 44 Exports

Alberta 1234 Wyoming Montana Washington North Dakota Minnesota Illinois Iowa Vermont Tennessee Idaho

Top 5 Top 10 The Economy Prairies-Great Plains Bilateral Trade Trade Breadth 1 Trade Volume Growth 4 Provincial 1 Intensity 22 33 44 Exports

Saskatchewan Manitoba 1234 1234 Montana South Dakota Wyoming North Dakota North Dakota Minnesota South Dakota Iowa Wisconsin Montana Oregon Wyoming Illinois Nebraska Iowa Wisconsin Minnesota Vermont Idaho Illinois

Top 5 Top 10 The Economy Great Lakes-Heartland Bilateral Trade Trade Breadth 1 Trade Volume Growth 4 Provincial 1 Intensity 22 33 44 Exports

Ontario

1234 Michigan Indiana Missouri Kentucky Ohio South Carolina West Virginia California Delaware Georgia

Top 5 Top 10 The Economy East — Quebec-New England Bilateral Trade Trade Breadth 1 Trade Volume Growth 4 Provincial 1 Intensity 22 33 44 Exports

Quebec

1324 Vermont West Virginia Utah New Hampshire Maine New York Connecticut Rhode Island South Dakota North Dakota

Top 5 Top 10 The Economy East — Atlantica Bilateral Trade Trade Breadth 1 Trade Volume Growth 4 Provincial 1 Intensity 22 33 44 Exports

New Brunswick Nova Scotia

1234 1234 Maine New Hampshire New Hampshire Massachusetts Connecticut South Carolina Rhode Island Rhode Island Massachusetts Maine Vermont Connecticut Texas Ohio Pennsylvania Oklahoma Arkansas Wisconsin Alaska Texas

Top 5 Top 10 The Economy East — Atlantica Bilateral Trade Trade Breadth 1 Trade Volume Growth 4 Provincial 1 Intensity 22 33 44 Exports

PEI NL 1234 1234 Maine New Jersey New Hampshire Rhode Island Rhode Island New Hampshire Massachusetts Massachusetts Idaho Maine Vermont Louisiana New York Texas Connecticut Connecticut Florida New York Hawaii California

Top 5 Top 10 The Economy Further Evidence on Cross-Border Links

• Correlations in economic activity

• Key clusters straddling the border

• Regional gateways for value-added activities The Economy Key Clusters Straddling the Border

West: Atlantic: Coastal Transportation and Logistics Footwear Heavy Construction Services Forest Products Oil and Gas Products/Services Agricultural Products Agricultural Products Distribution Services Fishing and Fishing Products Fishing and Fishing Products Power Generation Transmission

.

:

Quebec: - New England Great Lakes-Heartland Forest Products Leather Automotiv:e Footwear Building Fixtures Equipment Publishing and Printing Prairies/Great Plains and Services Furniture Metal Manufacturing Hi-tech, Pharmaceuticals Heavy Machinery The Economy All industries Ongoing Related Research

.

:

: Forestry Mining Energy The Economy Major Highway Corridors

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: The Economy Major North American Electricity Grids

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: Socio-Cultural Values Importance of Similar Values, Beliefs, Ideology

• Similar values, beliefs and ideology facilitate emergence of cross-border regions

• PRI research reveals socio-cultural values often more similar at cross-border level

• Key issue: Is there a regional sense of identity within cross-border regions? Socio-Cultural Values Closest Top Three Regions

Northwest New England New England California Rocky Mountain East North Central Rocky Mountain New England West North Central South Atlantic East North Central Northwest

California New England Rocky Mountain Mid-Atlantic Northwest East North Central

Alberta Atlantic Canada Northwest New England Ontario Rocky West East Ontario B.C. Mountain North North Mid-Atlantic Sask.-Manitoba Central Central

Atlantic Canada Atlantic Canada Ontario Ontario Alberta Sask.-Manitoba Socio-Cultural Values Gap analysis based on index of 32 values

Atlantic BC Alberta Sask-Man Ontario Quebec Canada

U.S. Regions

Western 6.3 4.6 7.3 5.3 7.6 6.3 Southern 13.0 9.6 7.6 9.3 12.0 6.7

Mid-West 8.5 7.0 7.0 5.5 9.5 4.5 Northeast 8.0 7.5 6.0 5.5 8.0 4.0 Socio-Cultural Values Public Discourse

“If it were a nation, PNWER…”. Socio-Cultural Values Public Discourse

• “The legislature in Washington State actually passed a motion that supported Vancouver’s 2010 bid because they understood that 2010 is great for BC, it’s great for Vancouver, but it’s great Premier Campbell for Washington State.” October 2003 Socio-Cultural Values Public Discourse

• “Alberta shares many ties with the U.S. — both in politics and in business. But our two jurisdictions are more than neighbours and business partners— we’re friends in the truest sense of the Premier Klein word.” March 2005 Socio-Cultural Values Public Discourse

• “Our region is separated by an international border, but united by a shared industrial past. And that past clearly demonstrates our regional interdependence – that what is good for one, is good for all.” Permier Dalton McGuinty Ontario, March 2005 Socio-Cultural Values Public Discourse

•“We should certainly build on the vitality of our continent’s natural regions … North American economic relations are based on regional economies that cross … our border” Premier Charest, February 2005 Socio-Cultural Values Public Discourse

• “There are so many areas of common interest between the New England states and Atlantic Canada and Quebec … We have many natural synergies and several areas of common interest…” Premier Williams Newfoundland and Labrador, June 2005 Cross-Border Organizations

• Huge number of cross-border organizations

•Two main types: –Multi-partners – Bilateral

• Regional differences: – Ontario and Quebec act independently in cross-border partnership – West acts more as cross-border region Select Organizations GeneraGeneraGenerall Pul PuPrpurprposeoseoseIn InItntetererggoverrgoverovenrnmnmmenenetanttalall Council of Great International Souris River Board Pacific NorthWest Economic Region (PNWER) MOUMOU Lakes Industries MOU Champlain / Lacolle Single Purpose Intergovernmental Council of State Governments - West Port of Excellence SinSingglele PuPurporpose Intenterrggoovveernmrnmentaentall (Environmental Focus) (Environmental Focus) Pacific Corridor Enterprise Quebec City & Albany SingSinSingglellee Pu PPuurporprposoesseeInte IInntetergorgrgoovveveernmrnrnmentamentaentall l Council Quebec – NY Trade (I(Infranfras(InfraststruructructcturetureureF FocusFoocuscu)s)) International Mobility Corridor Initiative and Trade Corridor CitiesCitiesa nandd Cr Corsosss-B-Boordrdeer r Organizations

British Columbia / Washington CivCivCiviliill Environmental Cooperation Council Cascadia Mayors Council MOU – Quebec & New York MOU – Quebec & Vermont Vancouver & Seattle MOU – Ontario & New York MOU – Manitoba & Minnesota MOU – Ontario & Michigan Discovery Institute Atlantic Institute for . Market Studies MOU – Alberta & Idaho St. Croix International Coutts / Sweet Grass Waterway Commission Red River Basin : Calais / St. Stephen Commission Buffalo & Niagara Northern Great Plains Inc. Eastern Regional Conference Council of State Governments - Midwest NEG-ECP Western Governors Association Gulf of Maine Council on Marine Env. Montana Alberta Bilateral Great Lakes Commission Great Lakes Environmental Advisory Council (MABAC) Directory Great Lakes Fishery New England – Canada Commission Toronto & Chicago Business Council International Association Toronto & Indianapolis Atlantic Salmon Federation of Great Lakes and St. Lawrence Mayors Great Lakes & St. Lawrence Cities Initiative Cross-Border Organizations Main Domains of Organizations Multilateral MOU PNWER NEG-ECP QC-NY ON-NY ON-MI MABAC Agriculture Border Energy Environment Forestry Culture High Tech Infrastructure Sust. Dev. Tourism Trade and Eco. Dev. Transportation Workforce Cross-Border Organizations Key Findings

• Often linked to economic activity

• Essentially provincial/shared jurisdictions

• Organizations often act as facilitators

• Some initiatives toward third parties (Winter games, Manitoba mission in Europe, regional promotion of tourism).

• Cities active in developing linkages Putting It All Together What are Major Cross-Border Regions?

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: Putting It All Together Two Overlapping Regions in Western Canada

West .

: Putting It All Together Two Overlapping Regions in Western Canada

West .

:

Prairies- Great Plains Putting It All Together Great Lakes - Heartland

West .

:

Prairies- Great Lakes- Great Plains Heartland Putting It All Together Two Overlapping Regions in the East

West . East

:

Prairies- Great Lakes- Great Plains Heartland Putting It All Together Two Overlapping Regions in the East

Atlantica

West . East

:

Prairies- Great Lakes- Quebec-NE Great Plains Heartland

Leader survey: more than 74% agree with this definition Putting It All Together!

Great What Westis the StrengthPrairies - of DifferentLakes - Linkages?East Great Plains Heartland Quebec Atlantica

BC AB AB SK MB ON QC NB NS PE NL The Economy Trade level Trade growth Trade breadth Trade dependency

Culture and Values .

: Organizations Intergovernmental Single-purpose : General-purpose Civil Cities

Relatively Strong Significant . Weak

: Common Characteristics of CBRs Leaders Define Model of Integration

• Sub-national linkages • Private-public partnership • Networks as opposed to institutions • Problem solving • Sectoral/functional • Low-cost engagements • Distinct but complementary to federal gov’t • Bottom/top • Widespread to most regions Key Characteristics of CBRs The West

• Sense of remoteness from national governments • Strong cross-border institutions with engaged private sector • Innovative approaches • Strong sense of regional identity Key Characteristics of CBRs Prairies-Great Plains

• Broad geographical expanse removed from North American markets • Informal and pragmatic networks • Growing consciousness of shared interest • Strong focus on trade corridors and transportation Key Characteristics of CBRs Great Lakes

• Maturity of economic linkages • No overarching cross-border organizations • Interregional market competition • Common challenges • Lack of regional identity Key Characteristics of CBRs Quebec /New England

• Mature and emerging economic linkages • Importance of trade corridor • More emphasis on bilateral linkages • Multi-level/multi-agency nature of networks • Limited sense of regional identity Key Characteristics of CBRs Atlantica

• Economic prosperity a key goal • Importance of history and geography • Strong stakeholder engagement • Need for infrastructure • Importance of personal relationships • Strong sense of regional identity Tangible Benefits Emerging Consensus

• Efficient networks • Pragmatic policy solutions • Competitiveness • Lobbying • Regional concerns • Democratization • Regional forums as a virtual infrastructure • Complement federal actions Tangible Benefits Some Examples: Leader Survey

(% Somewhat/Completely Agree)

CBRs lead to the development of strong networks 93%

CBRs facilitate the involvement of regional stakeholders in Canada-U.S. issues 92%

CBRs complement rather than compete with federal 84% CBR cooperation is primarily concerned with practical problem-solving in a broad range of fields 78% Cross-border organizations could serve as a model for North American institutions 54%

CBRs could pose a serious challenge to Canadian identity 6% Tangible Benefits What Some Senior Officials Said

“It can only be in everyone’s “Regional leaders played a interests that Washington and strong role in the (Government Ottawa integrate a regional of Canada) advocacy campaign (on dimension into their softwood lumber) in the U.S.” national decision- Jeffrey Parker, Canadian Consul General to Seattle making process.”

“Cross-border regions “Cross-border regions are a “… a bottom-up process create a mechanism to new economic deal with issues at hand, is required in the SPP”. nucleus…” John D. Dickson, Deputy Chief of Mission realistically and The HonHonourable. (Senator) at the U.S. Embassy in Ottawa Jerahmiel S. Grafstein pragmatically.” Todd Schwartz, U.S. Consul in Winnipeg “None of us are a model, we’re all “… the importance of examples.” “Cross-border organizations can Garry Douglas, transportation infrastructure Plattsburgh-North Country be very effective will grow in the future since it is a Chamber of Commerce key element in the service-based lobbying groups in both economy and in manufacturing Ottawa and Washington.” Raymond Chrétien, sectors with just-in-time industrial Former Ambassador of Canada production processes.”. to the United States Robert Noble, Deputy Consul General of Canada Tangible Benefits What Some Senior Officials Said

(Cross-border “The relationship with cooperation) ‘have led Minnesota on Devils to specific regions beginning to link up to Lake has produced “We successfully take issues to a joint advocacy and advocated for a ‘nexus mutual positions in deeper and more opposing the unilateral plus’ program” local level.’ outlet.” Matt Morison, Executive Director, PNWER Agency of Commerce and Government of Manitoba Community Development

“…if the Great Lakes (region) did half of what PNWER did, the nation would be much better off (economically)” Jim Phillips, President, “… particularly valuable in The Canadian/American Border Trade Alliance shifting legislators’ “We’re moving back to discussions into (…) the natural lines facts away from that existed before campaign-style confederation” Brian Dick, rhetoric” Vice-President, ACOA Government of Manitoba Key Challenges Emerging Consensus

ƒ Open border 71% 45% ƒ Effective border management ƒ Transportation infrastructure ƒ Regulatory differences ƒ Jurisdictional interdependence ƒ Different federal arrangements Critical Success Factors Emerging Consensus

ƒ Yield tangible benefits ƒ Be non-partisan ƒ Ensure continuity/interaction ƒ Have sufficient capacity ƒ Involve both public and private sectors Policy Implications Integrating CBRs Concept into Policy Framework

Competitiveness and prosperity ƒ Support supply chains ƒ Coordinate industrial clusters ƒ Develop concept of NA global production platforms National Regional decision-making development ƒ Stimulate synergies (actors and sectors) ƒ Pragmatic regional ƒ Address common challenges (e.g. public perspectives on national good issues) policies ƒ More effective regional issue managemmentent ƒ Briefing capacity for senior ƒ New policy-development framework? officials Canada-US relations

ƒ Policy solutions – learning what works ƒ Pre-empt/resolve bi-national disputes ƒ Lobbying capacity for Canada ƒ Stronger voice in national capitals Policy Implications Potential Actions for the GofC

Support more directly ƒ Financing and capacity building ((e.e.g.g. ggrarant,nt, pproroggraramm andand eexxecuecutivtivee interchange)

Assign Share federal Recognition best champions practices ƒ Monitor/diffuse ƒ Departments ƒ Annual conference ƒ Secretariat ƒ Research academia ƒ Individuals

Include in key initiatives ƒ SPP ƒ Pacific Gateway Initiative Policy Implications Potential Federal Champions

ƒ Regional Development Agencies

− Regional economic development and prosperity ƒ Foreign Affairs Canada and International Trade Canada − Canada-U.S. relations ƒ Industry Canada − Competitiveness of cross-border regional industries in global markets ƒ Federal Regional Councils − Cross-border regional perspectives on national issues ƒ IGA (PCO) – Intergovernmental relations Policy Implications The Challenges Ahead

ƒ If CBRs beneficial, why little federal attention? − Recent phenomenon − Regional differences − Fuzzy entities − Informal nature of networks − Bottom-up phenomenon

ƒ Next step – practical policy framework to guide the role of the GofC Publications ƒ Horizons (June 2004) ƒ Expert symposium (June 2004) ƒ Working papers ƒ Interim report (November 2005) ƒ Leader survey (December 2005) ƒ Roundtable report (Montreal) (February 2006) ƒ Roundtables synthesis report (May 2006) Publications Coming in 2006

ƒ Thematic papers (June 2006)

ƒ Final Report (Autumn 2006) Research Partners Federal Partners

Government Gouvernement of Canada du Canada Policy Research Projet de recherche sur Initiative les politiques

Western Economic Diversification de l’économie Diversification Canada de l’Ouest Canada

Développement Canada Economic économique Canada Development pour les règions du Quèbec for Quebec Regions

Atlantic Canada Agence de Opportunities promotion économique Agency du Canada atlantique Research Partners Other Partners

Emmanuel Brunet-Jailly University of Victoria Canada-US Inter-Parliamentary Group (Parliament of Canada) Susan E. Clarke University of Colorado

Debora L. VanNijnatten Wilfrid Laurier University