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### Viewing cable 04OTTAWA3431, SUMMIT AGENDA ON COMMON PROSPERITY: THOUGHTS ON

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
04OTTAWA3431 | 2004-12-21 21:09 | 2011-04-28 00:12 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Ottawa

`

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

` `

    UNCLAS SECTION 01 OF 03 OTTAWA 003431

    SIPDIS

    STATE FOR WHA/CAN:TBREESE, AHOLST; EB/TPP/BTA/EWH:AARON

    WHITE HOUSE/NSC FOR FARYAR SHIRZAD

    STATE PASS USTR FOR SAGE CHANDLER

    USDOC FOR 4320/OFFICE OF NAFTA/GWORD/TFOX; 3134/OIO/WESTERN
    HEMISPHERE

    SENSITIVE

    E.O. 12958: N/A
    TAGS: ETRD CA
    SUBJECT: SUMMIT AGENDA ON COMMON PROSPERITY: THOUGHTS ON
    NEXT STEPS ON THE REGULATORY FRONT

    ¶1.  (SBU) SUMMARY: AT THE BILATERAL SUMMIT ON NOVEMBER 30,
    2004, THE PRESIDENT AND CANADIAN PM PAUL MARTIN AGREED TO AN
    AGENDA FOR "COMMON SECURITY, COMMON PROSPERITY" THAT
    COMMITTED THE TWO SIDES TO "PURSUE JOINT APPROACHES TO
    PARTNERSHIPS, CONSENSUS STANDARDS, AND SMARTER REGULATIONS
    THAT RESULT IN GREATER EFFICIENCY AND COMPETITIVENESS, WHILE
    ENHANCING THE HEALTH AND SAFETY OF OUR CITIZENS".  WE
    UNDERSTAND THAT DISCUSSIONS ARE ALREADY UNDERWAY AMONG
    CAPITALS ABOUT HOW TO MOVE FORWARD ON THIS COMMITMENT.

    ¶2.  (SBU) CANADIAN INTEREST IN THIS AGENDA PROBABLY STEMS
    FROM THE RELEASE OF THE "SMART REGULATION" REPORT, WHICH
    MADE IT CLEAR THAT NORTH AMERICAN STANDARDS AND REGULATORY
    REGIMES SHOULD BE A PRIORITY FOR CANADIAN REGULATORS.  WE
    BELIEVE THAT THE COMBINATION OF A BILATERAL COMMITMENT TO
    JOINT APPROACHES AND GOC CONSIDERATION OF THE SMART
    REGULATION AGENDA PRESENTS AN OPPORTUNITY TO DEVELOP A
    PROCESS THAT CAN EVENTUALLY REDUCE REGULATORY DIVERGENCE -
    THE "TYRANNY OF SMALL DIFFERENCES" THAT INHIBITS TRADE AND
    REDUCES CONSUMER CHOICE ON BOTH SIDES OF THE BORDER.  THIS
    CABLE DESCRIBES THE "SMART REGULATION" INITIATIVE AND
    OUTLINES OUR IDEAS FOR MOVING TOWARD MORE LONG-TERM, BROAD-
    BASED REGULATORY COOPERATION. END SUMMARY

    INTRODUCTION: THE SMART REGULATION INITIATIVE
    ---------------------------------------------
    ¶2.  (U) FOR CANADA, THE BENEFITS OF NAFTA HAVE BEEN CLEAR,
    INCLUDING THE DOUBLING OF TRADE THAT IS NOW STRAINING BORDER
    INFRASTRUCTURE.  FURTHER GROWTH, HOWEVER, WHILE LIKELY, WILL
    BE CONSTRAINED BOTH BY BORDER INFRASTRUCTURE LIMITATIONS,
    WHICH ARE BEING ADDRESSED IN THE SMART BORDER PROCESS, AND
    BY REGULATORY DIFFERENCES WHICH CONTINUE TO IMPEDE ENTRY OF
    NEW PRODUCTS INTO THE MARKET AND LIMIT CONSUMER CHOICE.

    3.(U)  CANADA HAS JUST COMPLETED A THOROUGH STAKEHOLDER
    REVIEW OF ITS REGULATORY PROCESSES AND STRUCTURE.  THE
    CANADIAN "EXTERNAL ADVISORY COMMITTEE ON SMART REGULATION",
    CONVENED IN 2003, RELEASED ITS FINAL REPORT IN SEPTEMBER
    ¶2004.  THE COMMITTEE OBSERVED 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. THE OUTCOME CAN BE POOR REGULATORY AND
    ECONOMIC RESULTS AND HIGHER COSTS FOR GOVERNMENTS, CONSUMERS
    AND BUSINESSES."

    4.(U)  THE COMMITTEE MADE THE FOLLOWING RECOMMENDATIONS,
    AMONG OTHERS:

    --THE GOC SHOULD INCLUDE INTERNATIONAL REGULATORY
    COOPERATION AS A DISTINCT OBJECTIVE OF CANADIAN FOREIGN
    POLICY, WITH A PRIMARY AND IMMEDIATE FOCUS ON NORTH AMERICA,
    AND DEVELOP AN AGENDA FOR NORTH AMERICAN REGULATORY
    COOPERATION.

    --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;

    --CANADA SHOULD PROMOTE JOINT PRODUCT REVIEWS AND MOVE
    TOWARD ACCEPTING U.S. AND EU PRODUCT APPROVALS IN SECTORS
    WITH WELL-ESTABLISHED CONFORMITY ASSESSMENT PROCEDURES;

    --CANADA SHOULD STRENGTHEN INTERAGENCY REGULATORY
    COORDINATION AND DEVELOP OVERARCHING REGULATORY POLICY
    FRAMEWORKS FOR KEY SECTORS.

    IN ORDER TO PUT THESE RECOMMENDATIONS INTO OPERATION, THE
    COMMITTEE PROPOSED THAT THE GOC FORM MULTISTAKEHOLDER "SWAT
    TEAMS" TO IDENTIFY TROUBLESOME REGULATORY DIFFERENCES AND
    PROPOSE SOLUTIONS.  THE COMMITTEE IDENTIFIED AS PRIORITY
    AREAS:

    --MANUFACTURING/PRODUCT APPROVAL;
    --BIOTECHNOLOGY/LIFE SCIENCES;
    --ENABLING ECONOMIC DEVELOPMENT FOR FIRST NATIONS;
    --ENVIRONMENTAL ASSESSMENT PROCESSES; AND
    --OIL AND GAS EXPLORATION AND DEVELOPMENT.

    (THE FULL REPORT IS AVAILABLE AT
    HTTP://WWW.SMARTREGULATION.GC.CA)

    A "SMART" NORTH AMERICAN PROCESS?
    ---------------------------------
    5.(SBU)  We suggest that, in the context of our commitments
    in the November 30 statement, Washington agencies think
    about developing a broad-based bilateral or trilateral
    review of regulations that draws on these recommendations.
    While such a process could yield short-term deliverables,
    more importantly, it would set the stage for real progress
    in finding and eliminating a broader list of longstanding
    regulatory barriers than the NAI process has addressed so
    far.

    BRINGING REGULATORY EXPERTS TOGETHER
    ------------------------------------
    6.(SBU)  In our view, the logical first step would be to
    develop channels of communication between the regulatory
    oversight bodies, OMB and the GoC Privy Council Office (PCO)
    to exchange information on regulatory initiatives underway,
    set compatible timetables where possible and review existing
    regulations to identify areas for revision, or areas where
    we could negotiate mutual recognition agreements.  U.S.
    officials could also share experience on strengthening
    regulatory oversight and interagency coordination, a key
    recommendation of the Smart Regulation report.

    7.(SBU)  The agenda for these exchanges could include review
    of existing promising models, such as the joint PMRA and EPA
    pesticide review process, and a look at sectors identified
    in the Smart Regulation report and previous NAI discussions.
    These could include some aspects of drug approvals,
    processed food containers, and federal/state/provincial
    regulatory requirements for construction products.

    INVOLVING STAKEHOLDERS
    ----------------------
    8.(SBU)  Second, Washington agencies may also want to
    explore how to involve business and other stakeholders.
    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 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.

    9.(SBU)  Alternatively, or in parallel, both (or all three)
    governments could encourage maximum participation by
    stakeholders in the "smart regulation" process within
    Canada.  The Committee urged the GoC to designate a Minister
    to invite interested stakeholders to identify those
    regulatory differences for which elimination would not
    impede Canadian social (including health and safety) and
    environmental objectives. In any case, we should ensure that
    the USG and the U.S. private sector participate in this
    process as stakeholders and make recommendations by June
    ¶2005.

    TIMETABLE AND DELIVERABLES
    --------------------------
    10.(SBU)  Under this framework we could call on regulatory
    officials to reach certain objectives within twelve months,
    to serve as deliverables at a future NAFTA Summit or meeting
    of the New Partnership in North America.  Examples of twelve-
    month deliverables include:

    --Swat Team Reports: Stakeholder groups or "Swat Teams"
    issue reports on priority list of regulatory differences to
    address via harmonization or mutual recognition.  Such a
    list could include both bilateral and trilateral priorities,
    depending on feasibility.

    --Regulatory oversight bodies: OMB and PCO develop mechanism
    for consulting on new regulatory projects, decision
    mechanism for selecting regulations for parallel
    consideration or MRAs.  (e.g. applying EPA/PMRA pesticide
    model to other agencies)

    --Joint approvals: Independent agencies develop consultation
    process for joint approvals.  Example: CFIA and USDA could
    look into simultaneous approval processes for new seed
    varieties.

    --Initiation of joint reviews: An 18-month deliverable could
    be announcement/Federal Register/Gazette notices of first
    joint reviews of regulations in priority sectors.

    11.(SBU)  Such a framework would be a long-term investment
    in addition to an effort to identify "low-hanging fruit" in
    the regulatory sphere, although such a broad-based process
    might bring to light additional areas where early results
    are possible beyond those already identified in NAI
    discussions.  Post (Econ and FCS) would be prepared to
    support the process by working intensively with local U.S.
    and Canadian business contacts and regulators, DOC, and USTR
    to identify possible items for short, medium and long-term
    work programs across a number of sectors.

`