 Welcome to CSIS. Could I ask everyone to take their seats, please? Thanks for joining us early this Monday morning. My name is Scott Miller. I'm the Shoal Chair in International Business. I run the International Business Program here at CSIS, and I'm delighted to welcome you to today's event entitled NAFTA at 20. The North American Free Trade Agreement entered into force January 1, 1994. As a trade agreement, the NAFTA was a breakthrough in its comprehensive scope and high standards. It was a platform for vitally important regional integration that became both the economic level and also in the form of greater political cooperation between the three North American nations of Canada, the United States, and Mexico. Twenty years after NAFTA, it still remains the format for all comprehensive deep integration trade agreements negotiated by the United States. Many in the business community who operate in North America will tell you that trade agreements in general are a good thing, and they're useful, but NAFTA is essential and NAFTA remains essential to competitiveness in North America. Today we bring together a group of experts to examine where the North American relationship stands after 20 years from the NAFTA launch and to explore ways to intensify and improve competitiveness in the North American trading region. We'll begin with remarks today from one of NAFTA's principal architects, Ambassador Carla Hills. Ambassador Hills is Chief Executive Officer of Hills & Company, Co-Chairman of the Council on Foreign Relations, also a Co-Chair of the Advisory Board here at CSIS, and she was U.S. Trade Representative for George H. W. Bush from 1989 to 1993. Among her many accomplishments, you'll note that if you know your history or actually Google NAFTA, you'll find a photo from the signing ceremony in 1992. You'll find Carla Hills at the table. You'll also notice that Carla is the only one who managed not to age in that period of time. So she's doing something right with her life, but she brings not only the experience of leading the U.S. team and the negotiations on the NAFTA, but 20 years of professional experience since then, helping companies navigate this trade agreement and improve their business to result. So please welcome Ambassador Carla Hills. Thank you for that very generous introduction. And it's great to see so many of my pals here. Thank you for coming out when it's freezing cold, and it's only this gorgeous building that would draw you, plus the panel that's going to follow and clarify all the things that I will say. But this building really is very special, and it's wonderful to be at CSIS every time I walk in the door. Scott's already reminded you that President H.W. Bush, Herbert Walker Bush signed the trade agreement, the NAFTA, in 1992. It was signed into, it was put into effect by President Clinton in 93, and it became enforced in 94. And so with 20 years of experience, the question that Scott has put to me is what has the NAFTA meant for the United States, and does it have significance for the future? And in making this assessment, I think that we need to be clear about what the agreement actually did. By joining the economies of Canada, United States, and Mexico, the NAFTA created a $19 trillion regional market with 460 million consumers. It was the first comprehensive trade agreement to join developing and developed countries. And it has served as a template for the future free trade agreements by achieving wider and deeper market openings than any prior trade agreement up to that time by eliminating tariffs on all industrial goods, guaranteeing unrestricted agricultural trade between the United States and Mexico, opening a broad range of services, including financial services and providing national treatment for cross-border service providers, providing a high standard of protection for patents, trademark, copyrights, trade secrets. And it was the first international trade agreement to do that. And it established clear rules to protect the rights of investors by prohibiting barriers such as local content restrictions and import substitution requirements. And as a result of the market openings that this agreement created, the economic activity between the three nations exploded. Today Canada is America's single largest export market, and Canada sends us roughly 98 percent of their energy services and products. More than 8 million U.S. jobs depend on our trade with Canada. Mexico is our second largest export market, and some 6 million U.S. jobs depend on our trade with Mexico. And over the past two decades, a highly efficient integrated supply chain has developed among the three North American economies. Global trade flows have increased roughly 400 percent, from about $290 billion in 1993 to over a trillion dollars in 2012, and more than $2 billion in goods and services across our northern border every single day, and more than $1 billion per day across our southern border. And about half of our trade with Canada and Mexico take place between related companies, and the resulting specialization has increased the productivity in all three economies. We not only sell things to one another, we make things together. And quite remarkably, for every dollar of goods that our two neighbors export to us, 25 cents worth of U.S. inputs is in Canadian goods that come across our border, and 40 cents in the Mexican goods is U.S. content that comes across our border. By way of comparison with respect to imports from Japan, that figure is 2 cents, and with China it's 4 cents. And Mexico has made a substantial investment in the United States in signing the NAFTA in sectors of cement, bread, dairy, and retail, which have contributed to our tax revenues and jobs. And U.S. investment in Mexico has grown substantially, about half of it in the manufacturing sector, and most of that in the auto sector. And much of the output of our investments in Canada and Mexico come back to us in imports of intermediate goods, which add to our competitiveness and our production and final products. And our investment in Canada, I should add, is Canada has invested about $200 billion in the United States since the NAFTA, which makes it the U.S. fifth largest investor, and we've invested about $310 billion in Canada to become its largest investor. And in spite of this really remarkable intrarational growth that can be traced to the NAFTA's opening of the regional markets, the agreement still has its critics. Most of those who attack the NAFTA on economic grounds focus on Mexico, not on Canada. And they claim that the partnership is one-sided, that the agreement is Mexico's gain and America's pain. But the economic data proves that having Mexico as a NAFTA partner has served U.S. economic interests extremely well. Last year, roughly 13 percent of our nation's total exports went to Mexico. That's exceeding our sales to Brazil, India, China, and Russia, the BRICS, combined. Indeed, Mexico buys from us more goods than all the rest of Latin America combined, and more than all the goods bought by Germany, Great Britain, France, and Netherlands combined. And although the debate continues about how many jobs the NAFTA actually created, it is, I think, generally agreed that the market openings created by this agreement generated a substantial increase in the jobs related to exports, which pay on average 15 to 25 percent more than jobs that are purely domestically focused. And with 113 million consumers and the purchasing power of over a trillion dollars, Mexico offers opportunities that are quite substantial for entrepreneurs, whether they be large or small. But it's the small entrepreneurs that particularly benefit from Mexico's proximity and its openness to our trade. Mexicans purchase about 11 percent of the exports produced by our small and medium-sized enterprises, which account for more than half of this nation's job creation. And making this economic picture even brighter, for every dollar that Mexico earns from its exports worldwide, it spends 50 cents on U.S. goods. And the economic integration that has occurred among the three North American economies in the past two decades has made the North American region one of the most competitive in the world. But we must remember that the rest of the world is not standing still. Supply change encircle the globe and bilateral and regional trade agreements, where the United States is not a party, have proliferated. Continuing to open global markets to products, services, investment, ideas, and people originating in this hemisphere is an ensuring that our supplies, chains, work, maximum efficiency is vital to our nation's continued growth and competitiveness. And there are a number of actions that we could take that would maximize our opportunities to build on the NAFTA platform and create new commercial opportunity, cut costs, create jobs, and generate substantial economic benefit for all of our citizens. For example, when we evaluate the benefits that we might secure for our nation from future trade agreements, we should assess the potential benefits not only from a national basis, but from a regional basis, lest we lose substantial new competitive opportunities that we could secure by using the NAFTA platform. And that connection, having Mexico and Canada join the Trans-Pacific Partnership, was a positive development that will better enable us to take positions to maintain and advance the unique competitiveness of North America region. And similarly, as we move forward to negotiate the transatlantic trade and investment partnership with the 28 states that comprise the European Union, we would benefit substantially from having Mexico and Canada join those negotiations. And I think the reason for doing so are very persuasive. First, it would strengthen the agreement, give it more heft by adding 150 million consumers and a trillion dollars in GDP and thus expanding market opportunities. Second, it would reduce the complexity that would result if our two neighbors are excluded because Mexico already has a free trade agreement with Europe and has had one since the year 2000, and Canada announced that it had negotiated a new trade agreement with Europe just this past October. And having to deal with three separate agreements with different rules of origin and different customs measures would not only create a headache, but an unnecessary cost burden for our entrepreneurs. And it would erode the unique and hugely beneficial economic integration that we have achieved with our two neighbors as a result of the NAFTA. Third, having all three North American governments participate in the negotiation would give us all an opportunity to upgrade and expand the NAFTA. Significant advances have occurred in the areas of data flows, telecommunications and other areas that weren't on the table when we negotiated the North American free trade agreement. And fourth, it would provide us another opportunity to provide greater regulatory coherence. That's the focus of the transatlantic agreement because our tariffs between the United States and Europe are roughly about 3 percent high in some areas, but a handful. But our regulations are very burdensome and quite different on both sides of the Atlantic. And that could have a tremendous effect on half the world's trading volume. And finally, having our two neighbors join this negotiation could facilitate President Pena's program of economic reform that we so strongly support, pointing to the benefits that Mexico could potentially gain from this mega agreement would be rather similar to how President Salinas used the NAFTA to begin the economic reforms. And we strongly support what Mexico is trying to do in the economic region, not only in the areas of energy and telecommunication, but expanding political participation. So as we move forward in the 21st century, we need to take steps that will maximize future growth and that will require our governments, think tanks, business organizations to educate our populations about the tremendous benefits that can result from thinking about and dealing with trade and investment opportunities not only as a single nation, but also as a highly integrated region that North American has become. And there's no better time than the 20th anniversary of the NAFTA to move forward on this. And I'm grateful to CSIS for picking up the banner and starting the process. So thank you all for being here, and I look forward to listening to the panel. Thank you, Ambassador Hills. I'd like now to invite the panel to come forward. We have several experts in the North American region to discuss this topic today, but I'm delighted to be joined. Ambassador Hills made the comment in the green room that a lot of people at Washington dinner parties would like to do this very thing. We arranged the name cards, so we're going to do that. What I'd like to do is my great pleasure to turn this panel over to our moderator, Ambassador Charlene Barshevsky. Ambassador Barshevsky is a senior international partner at Wilmer Hale, who was U.S. trade representative from 1997 to 2001 for President Bill Clinton and has both her career prior to government service and after government service and in government service, has helped U.S. businesses deal with the North American Free Trade Agreement. And so without further ado, Ambassador Barshevsky. Thanks so much, Scott. Let me first of all start by congratulating Carla on her remarks and, of course, from her tenure as USTR. Let me also say that every organization with which Carla is affiliated builds a new building. The Peterson Institute, new building. Council on Formulations in DC, new building. CSIS, new building. So if you live in the district and you were pleased to see your property values not decline, this is why. Let me also thank Scott for hosting this event, as Carla said, and it's very timely and for your work on the NAFTA and so many other trade initiatives. So before I introduce our panelists, I thought I'd make a few remarks. Let me also acknowledge Bill Brock, another former USTR and one of the great people of Washington truly. Let me start by recalling what John Kennedy said about Canada. It applies with equal force to Mexico. Hello, Jim and Jim Colby and Thelma Aske. I mean, this is ridiculous. I could introduce all of you to each other. John Kennedy said with respect to Canada, but as I said, it applies to Mexico as well. Geography has made us neighbors. History has made us friends. Economics has made us partners. And necessity has made us allies. One of the strongest concrete expressions of this observation and this partnership is NAFTA. Now, as Carla said, NAFTA's trade liberalization was deeper than any previous free trade agreement. It covered not only goods, but also services, investment, IP, and so on. And it began to tackle issues of labor in the environment, which were new to the trade agenda. It was also the first FDA between a developed and developing country. And critically, it included robust enforcement measures that the GATT, which was the precursor to the WTO, and in existence at the time that the GATT failed to have. The results, of course, speak for themselves. Overall, intra-NAFTA trade in goods has more than tripled since the agreement took effect and atop the trillion dollar mark for the first time in 2011. Trade and services has also thrived, nearly doubling. With respect to Mexico, two-way trade has surged over 500% compared to half that for non-NAFTA countries. This reflects one of NAFTA's most enduring contributions to economic competitiveness, the rationalization of North American supply chains, and the accompanying growth in the trade of intermediate goods. Today, largely thanks to NAFTA, more and more manufacturing processes span both sides of the border, and factories are able to achieve greater economies of scale. At the same time, Mexican per capita GDP more than doubled, and we have seen a five-fold increase in inward FDI into Mexico from the United States. With respect to Canada, two-way trade has also increased. About the same as trade globally, but bear in mind, Canada started from a very high base. It was already our number one trading partner at the time NAFTA was negotiated. So the 270% increase in trade since is saying a lot. In addition, if you look at specific sectors of trade, the agreement with Canada has proven extraordinarily beneficial on both sides. Agriculture is a case in point where two-way trade is triple that compared to trade with non-NAFTA countries. And today, of course, Canada is the single largest market for US agricultural products, and not surprisingly, Mexico is number two. So overall, NAFTA has been a resounding economic success, and has enhanced North American competitiveness and cooperation. But there is quite a bit of room for improvement. The FTAs that have followed NAFTA, and Korea is a good example, the chorus agreement, has far more robust disciplines in areas like IP, state-owned enterprises, competition, labor, and the environment. And of course, NAFTA never addressed 21st century challenges. There was no internet when NAFTA was negotiated. The internet that existed was among universities. Social media, there was no social media. iPhones, iPads, all the rest weren't there. Cross-border data flows, not an issue. Biologics, not an issue. Biotechnology, not an issue. NAFTA's beginning to show its age. And without repair, it will erode. Unfortunately, there are also areas where NAFTA hasn't achieved its promise. For example, if you look at IP, Canada provides innovative pharmaceutical companies with only a very limited right to appeal marketing approvals for generics. And Canadian courts have recently been opposing very high utility requirements for patents, in effect discriminating against innovative pharmaceuticals. Until 2013, Canada was on the IP priority watch list with Russia and China. Canada has since graduated to the ordinary watch list. But come on. For NAFTA countries, nobody should be on any watch list in areas like this. These deficiencies need to be cleaned up. Another area of concern, of course, is security related and security restrictions on the flow of goods and people across borders. After NAFTA's implementation and in the wake of 9-11, border security increased to such an extent that it began to hamper trade, create long wait times at the border, and prevent goods and workers from crossing freely. We certainly need to ensure security, but we also need to ensure that border bureaucracy does not unnecessarily stifle economic growth. So there are many items that are or should be on the trilateral agenda to ensure that NAFTA's foundational status is maintained for the good of all three countries. I think it would be unwise and unnecessary to reopen NAFTA formally. I don't see any particular point in that. But I do think there are four main paths for building upon NAFTA's success and updating NAFTA. First, adopt targeted solutions to specific outstanding irritants in the trade relationship. IP is an example. Movement of personnel is an example. The Obama administration should rededicate itself to effectively using existing ad hoc bilateral forums, including the forums it itself has created, which have been underutilized and are not yet producing concrete results. Second, we should make incremental improvements in NAFTA, including chapter by chapter by updating agreements as needed, particularly where those updates can be implemented by regulation rather than legislation. These kinds of updates can be negotiated in the existing forums and working groups and can take their cue from more recent FTAs and from agreements that are on the table. Third, we can use TPP as a vehicle to enhance NAFTA disciplines. Canada, Mexico, and the US, as Carla pointed out, are all parties to TPP, which will involve deeper liberalization in many areas, including services, investment, competition policy, IP, and the range of 21st century issues. Where TPP imposes a higher standard, I think it should be the governing discipline in North America. Where TPP conflicts with NAFTA but does not impose a higher standard, the NAFTA party should negotiate as needed to resolve the conflict. But this approach would make it possible to dramatically improve upon the NAFTA while maintaining its primacy in North America. And fourth, we can use TPP as a potential template for enhanced talks on regulatory harmonization among NAFTA countries. To a certain extent, of course, regulatory talks are underway in the forums that have been created. But TPP can provide a much more robust example and provide a means, a template, for accelerating and deepening regulatory reform. So these four strategies, targeted solutions, chapter by chapter improvements, TPP and TTIP, can together ensure the vibrancy of NAFTA while most importantly, driving convergence between the legal frameworks governing trade in North America, Europe, and Asia. Convergence here is absolutely the key. It'll facilitate greater consistency in treatment and outcomes and avoid the regional vulcanization of trade. Convergence will help guarantee the future of North American competitiveness globally and ensure at the same time that our trilateral partnership remains robust and forward-looking. So with that, I'd like to turn to our distinguished panelists who I will now introduce. Laura Dawson on my left is president and founder of Dawson Strategic, an Ottawa-based consulting firm specializing in cross-border trade, investment, and regulatory issues. Laura was previously a senior advisor on economic affairs at the U.S. Embassy in Ottawa. She also keeps one foot in academia, serving as a public policy scholar at the Woodrow Wilson Center and a senior fellow at the McDonnell Laurier Institute. Second, Chris Wilson. Chris is an associate at the Mexico Institute of the Woodrow Wilson Center, where he develops the Institute's research and programming on regional economic integration and U.S. Mexico affairs. He's also the author of Working Together, Economic Ties Between the U.S. and Mexico, and he is co-author of The State of the Border Report, both published by the Wilson Center. He has written op-ed columns for the Wall Street Journal, Politico, CNN, and the Dallas Morning News. Our third panelist is Chris Sands, another Chris, senior fellow at the Hudson Institute, where he specializes on U.S.-Canada relations as well as North American economic integration. Chris also teaches, and this list is unbelievable, at Johns Hopkins SICE, at the American University School of Public Affairs, at the State Department's Foreign Service Institute, and of course at the Department of Homeland Security. He's a frequent commentator in print and on television. And last but not least, our captain, Scott Miller. Scott is senior advisor in international business and the shoal chair in international business at CSIS. Before that, he was the director of global trade policy at Procter & Gamble, where he led, I think, every campaign supporting U.S. free trade agreements. He has also served as a liaison to USTR's ACTPIN, as well as the State Department's advisory committee on international economic policy. He has been and he remains a leader in our field. So with those brief introductions, please, Laura. Thank you. Good morning. I think you'll forgive me a minute to just sort of catch my breath and be dazzled. Having to speak after Ambassador Barczewski and Ambassador Hills is quite an honor. These two women have led the United States and Canada through many important trade initiatives. And it's a bit overwhelming for a trade policy professor from Carleton University in Ottawa to be the third speaker. I'd also like to thank Scott and CSIS for the invitation to speak this morning and for putting this program together. It's lovely to see so many friends and colleagues from Government of Canada, Mexico, the United States, various organizations. This is like the A team or the NAFTA All-Star team in this room. This is quite incredible. So if I say anything wrong, please, throw something at me. We are here, the three, the two Chris's and I, because we were involved in the creation of a report that was commissioned by the Government of Canada, although it doesn't reflect the opinions of the Government of Canada, to do some thinking about the future of NAFTA and a framework for North American competitiveness. There is no doubt, based on your own knowledge and the articulate comments made by our ambassadors this morning, no doubt that NAFTA was and is a very successful agreement, a trail-breaking agreement really, establishing a framework for regional trade agreements when there were few, if any, models prior to that. But as both of our speakers have already said, it's an agreement that needs updating. It's an agreement that was negotiated before the internet. It deals very little with energy issues, which are now so important to all of us, digital transfers, movement of people. Unlike the European Union agreements, the NAFTA doesn't contain a mechanism for continued growth. Yes, there are the NAFTA working groups, but it wasn't an overarching enforcement mechanism that would force us to move forward. And unfortunately, I would say that the NAFTA has languished in many respects. The fact that we did do a good deal initially, combined with the really bad press that NAFTA has received, particularly in the US, has made it very difficult to promote a robust and evergreen agreement. We have therefore moved on to stop-gap measures. One of the things that we have adopted as three countries is a series of dual bilaterals where on important issues like regulatory cooperation, borders, energy, et cetera, rather than the three parties sitting down and having a robust, meaningful conversation. Yes, we do have trilateral summits from time to time, but a down-in-the-weeds conversation about the problems and how to fix them, we're now dealing with this in a bilateral context. Some would argue that this is the best way to go. And I've had some spirited debates with my Canadian colleagues. For example, the regulatory cooperation council process, the beyond-the-border process, have definitely made some very strong progress in the last couple of years. And they argue to me that they can move faster bilaterally than we can move trilaterally. The problem for me, however, is that this bilateral initiative lacks political attention. It is rapidly running out of gas. I don't see that there's going to be life in these agreements past 2014. Maybe I'm wrong, but I think that in order to maintain the political momentum and the economic impetus for the agreements that we have, we need to trilateralize them. This is not the Mexico of 1992. I think in Canada, in particular, we tend to have outdated perceptions of who our southern trading partner is. Mexico is now one of the fastest-growing economies with a growing middle class, with growing skills, human resource capacities. They are our engine of growth for the region. They are an emerging market that is contestable. Yes, China and India are interesting and important, but Mexico is a contestable emerging market, in particular for the small and medium-sized enterprises. I want to focus just briefly in my remarks on the importance of SMEs. I argue that NAFTA and the Canada-U.S. Free Trade Agreement were the agreements of big business that large companies saw large tariff barriers and lobbied hard to get these looked after. And once those large barriers moved out of the way, we lacked a business consensus, which continued to push for progress and a deepening and a widening of our agreements. Why? Because the small and medium-sized enterprises are, frankly, too busy to lobby on behalf of new initiatives. Also, the work that we need to do, as Ambassador Hills pointed out, is in the area of non-tariff barriers. It's in these picky little regulatory standards, technical barriers, inspections, things that are notoriously difficult to root out. What we need to do is to reduce the transaction costs by getting rid of these non-tariff barriers so that our small and medium-sized enterprises have an opportunity to flourish, have an opportunity to trade into our nearest markets and also through the world. I believe that a basis of North American competitiveness is a platform for our region's competitiveness throughout the world, Asia, Africa, et cetera. I also believe that it's very important that our three governments exercise the leadership to take up the flag for the small and medium-sized enterprises to reduce transaction costs to make it easier for us to function as an integrated market. In the paper that Chris and actually the other Chris is standing in for Duncan Wilson, the kind of Duncan Wood at the Wilson Center, the kind of interchangeable. In the paper, we recommend several specific areas of operation, we recommend trilateralization of the regulatory cooperation process, not necessarily full consensus and full cooperation on each issue, but for heaven's sakes, we ought to have a Mexican representative attending some of the Canada-US meetings and a Canadian representative attending some of the Mexico-US meetings in order to find consensus where there is consensus and bring some of these initiatives in specific sectors together. Similarly, we would like to see that move on our border initiatives, recognizing that they're important security dimensions to be considered, there are also many economic benefits that could be derived from rationalization and cooperation on our multiple borders. We're recommending a harmonized trade policy where harmonization is possible and having Ambassador Barshevsky and Ambassador Hills already outline some of the ways we can do that. I won't go into detail, except to say that sitting at the same table is not the same as negotiating together. I think there has been a belief that, may I say it, from the US that Canada and Mexico are kind of the bird in the hand. We've already got NAFTA, now we're gonna get the Europeans, now we're gonna get Asia. We also recommend a more intense focus on infrastructure, cooperation, not just on building things together, but needs assessment and feasibility. Human capital, which is our way of saying movement of people, labor mobility, where possible, investment in innovation, research and development, and energy. We need a trilateralized energy dialogue which focuses on ways to rationalize movement and distribution of energy and ways to really capitalize on the fact that our region is unique in the world and that we're self-sufficient in energy and we have things to trade externally. The fourth point I have has to do with leadership. And in my original notes, I said we need leadership from our three governments in order to get the North American Competitiveness Project on the road. And I suggested various incremental ways to do it. And unfortunately, your Secretary of State, John Kerry, stole my thunder this morning. If you've read the Miami Herald, an Oppenheimer interview and also CNN and Espeño are saying that John Kerry has announced that he's going to deepen the North American trading relationship with Canada and Mexico and potentially expand that to other Latin American trading partners and that this initiative may be fleshed out in time for the North American Leader Summit in February. So to that, I say, hooray, our work is done. Thank you. All right, thanks very much, Scott and everyone here for the opportunity to speak with you today. I mean, I think when we're considering the question of whether or not to deepen North American integration, whether or not to deepen this partnership that was forged 20 years ago with NAFTA, there are two ways that you can think about that question. One is to look back at NAFTA and see what it's done. Say, was NAFTA a good idea? Was the integration that it created a positive for the region? And I believe, and I think we've heard today that the answer to that is yes. But nonetheless, the agreement is seen in public eye as something that's still very contentious. So we could rehash those old debates over the giant sucking sound of jobs that may or may not have happened. The whole thing. Or we can take a more forward-looking approach and say, you know, where we are now is fundamentally different than where we were 20 years ago. So the decision of whether or not to move forward is a fundamentally different decision than the one of whether or not to implement NAFTA, create NAFTA 20 years ago. And that's the approach that I think that we've taken with the paper is much more forward-looking approach. And that's important because the relationship really is fundamentally different. NAFTA didn't just expand the volume of trade between our three countries, which it did. It also deepened it in a really profound way. And it's been discussed today. It's this creation of production sharing, a joint manufacturing platform across North America. That means that we trade inputs. We trade materials, which are then meaning that we're building products together and not just selling them to one another. That has deep implications because it means that the competitiveness of each of our countries depends on the competitiveness of the other countries in North America. So if Mexico improves productivity in its energy sector or in its manufacturing sector, that means that there are better inputs to be used in production here in the United States, meaning our products are better or more competitive for export to the world. They're more competitive vis-a-vis imports from China, from Europe, from the rest of the world. So we're linked together in competitiveness in a way that we were not linked together 20 years ago. I think that changes the way that we look forward and ask the question. So reframing the question, we would ask, given how deeply connected our manufacturing sector is, what can we do to boost the competitiveness of regional industry vis-a-vis competitors around the world? And so if that's the key question, is how to make North American exports, North American products more competitive on the global market, I think that there's some things that we should look at that are happening right now, some new changes that are underway that would guide us in a couple of important directions there. And since so much of what North America is about, the trade in North America is about this co-production of manufactured goods, I think it's important to reflect on what's happening right now in the world of manufacturing. We've thought about today already the changing nature of the global trade architecture and how NAFTA fits into that and how that demands that we update NAFTA, that we deepen regional integration. But I also think that there are changes in the way that we're manufacturing products in technological advances that demand that we rethink and update NAFTA. And what I mean by, I mean, basically, advanced manufacturing, the increased use of technology, things like robots, sensors, advanced machinery in the production cycle, I mean, what that basically means is that the portion of the pie, if you take the pie of what are the different costs of production of a product, the portion of that that's low skilled labor is shrinking. We don't need as much low skilled labor to create products anymore. What's the implication of that? It means that everything else in the pie becomes more important. As a company is deciding where to locate their manufacturing, where to locate a plant, it becomes comparatively much more important now what all the other factors of production are. And so I wanna focus on two of those very briefly. The first is energy. And this is, we're in a very propitious moment in North America as we think about energy. Energy is an important input into the production cycle. It's an important input into the creation of manufactured goods. And so right now as we're undergoing the sort of shale oil and shale gas revolution, here, Mexico at the same moment is passing, has passed through both chambers of Congress. Now, the constitutional reform goes to the state Congresses to be passed, but it's looking very positive. So Mexico is in the process of passing the biggest change in its energy policy in 75 years. This fundamentally changes the ability to have a North American discussion of energy. Whereas there was a sensitivity previously, sort of like there was before NAFTA on a much broader basis. There was a sensitivity in the relationship in terms of Mexico's participation and ability to participate in a discussion about regional production. Energy was off the table at that moment. Well, energy is back on the table for a North American discussion now. And it's at a perfect moment because of these other changes in technology that are allowing energy prices to drop in North America. Now Mexico can participate in that, which means that the manufacturers in Mexico can participate in that advantage in a way that brings competitiveness back to the entire North American region. The second is human capital. So as the need for low-skilled labor shrinks, the need for high-skilled labor increases. That's both because you need people to run these complex machines, to be able to fix these complex machines, to be able to program them. But it's also because it becomes comparatively more important to the research and design component. And at the same time, research and design is increasingly integrated into the manufacturing process. It's increasingly important for manufacturers to have their R&D folks close to and in close communication with their production people so that they can be more nimble as they put a new product on the market. So all of this is forcing us then to ask the question of what do we need to do in North America to ensure that we have the human capital to attract manufacturing to the North American region and to keep it here. And I think that there's a lot that each country needs to do in terms of education to do that. But there are a couple of things that we can do together as a region. And Mexico in the United States recently launched an initiative to begin looking at how to increase educational and research exchange between the two countries. The numbers right now are really low compared to what they should be given the closeness of our economies and the size of our countries. So there's an effort there. It needs energy. It needs energy and maybe it could be trilateralized also. Maybe this is an opportunity to bring in Canada, put this in the context of a reflection back on where we've come in the last 20 years and where we can go together. And one of the things that we'll need to do is we'll need to boost the level of educational exchange and research partnerships that we create between universities and all three of these countries. The list sort of goes on and on and I encourage you all to take a look at the paper to see some of the other ideas. But I think I'll leave it there so we have time for more discussion. Thank you. Thank you very much and it's great to be here. I have to say 20 years ago, Scott, I was here. Well, not here, but at the other here. And I was lucky enough to be at CSIS as a junior Canadianist. You can probably imagine what my parents thought that Christmas I came back and I said, I've got a job, I'm a junior Canadianist, but it was very exciting at the time and... Sounds nice, but not promising. And here I am now, so I haven't accomplished that much, but it was an exciting place to be then 20 years ago as it is an exciting place to be now. And I'll never forget it as a moment in my career because I had the opportunity to really see what makes CSIS great. And what made CSIS great, what still makes it great, is the combination of foresight, vision, and action that really helped bring things together. 20 years ago, CSIS had a project on Canada and a project on Mexico. And the reason we had a Canada project and a Mexico project comes down to someone who's here in the room today, George Foreo, who was the head of the America's program and knew that we were going to need to understand Canada and Mexico better as they became deeper trading partners, deeper economic partners. He was interested in not just the economy, but the politics. And he made sure that there was the money, which is very important in think tanks, that we could hire and expand and become the strongest program with Canada and Mexico as full folk guy here. That was how I got to be the junior guy. It wasn't really good enough to be the big one, but I at least came in. And when I got here, shortly after I got here, again, with some heavy influence from George, I had the opportunity to work with someone who held the William Simon chair here at CSIS, Sidney Weintraub. Now a lot of you remember Sidney. Sidney, 30 years ago, in 1984, published his famous book at the Brookings Institution, Free Trade with Mexico, question mark. Raising the idea that trade with Mexico could be a development engine. That it could help not only to change the nature of Mexico, but the nature of the Mexico-U.S. relationship. That's vision. And he saw that after years of working in the economics part component of the State Department, back when the State Department ran trade in those days, and really articulated it persuasively so that a generation of American leaders 10 years later really thinking about what NAFTA could do. And that made a big difference, but there was one other component, and that's another person that many of you will remember, DeLal Baer. And DeLal Baer was the senior Mexicanist. She ran the Mexico Project then. And when NAFTA was on the horizon, she did something that CSIS then and now does so well. She created the NAFTA and Beyond Commission. And as we had a tough debate, you'll remember about the ratification of NAFTA. She convened every former living U.S. president, every former U.S. living secretary of state, every former U.S. secretary of treasury, and every former U.S. TR or U.S. trade representative that was around, all of them. Plus the very top company, corporate leaders from around the country who all came together to sign on to the importance of NAFTA and getting it done and getting it ratified. And as close as the NAFTA fight was, I don't think it's an exaggeration to say that the ratification was in large measure, contributed to by this institution, CSIS, and by DeLal, and by Sydney, and by George Forill, and a little bit by the junior Canadianist, but not very much. So coming back 20 years later, we tried to take a look at where this relationship could go. And I'm not gonna repeat what my colleague said, but I wanna underscore just a couple of things that I think deserve just a bit of additional attention. One is we have to recognize that in 2001, this relationship changed again. It wasn't just NAFTA that we're thinking back on. So September 11 attacks brought us a much more robust border than we had had, and added heavy compliance costs to the supply chains that cross North American borders. Now we want to be secure. It's not about abolishing security, but we've got to find ways to make the borders work more efficiently, less burdensomely on our trade. Secondly, infrastructure. We built this continent on East West infrastructure, connecting markets on the Atlantic to markets in the Pacific. We need more North-South infrastructure, road, rail, even IT infrastructure. And that's something that governments must do. We need more pipelines, more power lines to connect the energy markets that we have. And that's something that governments can enable. Trade agreements allow for specialization, and we have an historic opportunity to let our labor markets take advantage of what NAFTA has created. We need to divorce citizenship from the right to work and allow North Americans anywhere in the continent the right to work in each other's countries. You want to change citizenship? That's a different line, but we should be able to have talent go to where it's needed. And that's something that governments can do to empower and enable their citizens to take full advantage of continental integration. And finally, intellectual property. We talk about it a little bit in the paper, why not a North American patent? Why not full mutual recognition of North American regulatory approvals so that we can truly achieve what NAFTA set out to do, a single market? This is, this conversation which Scott has brought together so well is the beginning of the foresight, seeing what needs to come. And that's what CSIS always begins on. And what I hope will come after this conversation with the participation of all of you in the room is the vision and the action to get it done. Thanks very much. Thank you, Chris. And thanks to all the speakers thus far. I'm going to use my time to try to pull some threads together for our discussion. The first one I'd like to pull on is based on a comment by Ambassador Hills about the way we in North America we make things together. I think while it's fair to call NAFTA a trade agreement, I want you to stop thinking about North America as a trading block. It's not a trading block in terms like Ricardo would put it, with trading English cloth for French wine. It is a production block. In North America, we don't simply sell things to each other. We make things together, and then we sell them to each other and to the rest of the world. And that rest of the world is the important part. But what really happens in North America is we make things together. That was true before NAFTA. And NAFTA was a heroic attempt to advance that notion of making things together and essentially conforming the policy and regulatory footprint to the commercial footprint. The second thread I want to pull from that one is as a failed engineering student, I learned about statics and dynamics. And always found statics a lot easier. But one of the core problems that we have in NAFTA after 20 years is not that it wasn't a breakthrough important agreement. It's that rules are static and the commercial environment is dynamic. What's happened is that commercial footprint, which NAFTA did a really good job of conforming to in 1990, in the late 1990s, continued to change. New opportunities were created by NAFTA. That changed the commercial footprint. Innovations like information and communication technology, the rise of value chains, the search for deeper specialization all changed that commercial footprint. You can see how advanced this is now when you look at North America, if you look at satellite images, it's in some categories, in some sectors it's almost impossible to find the national borders. Someone showed me a map of electric power generation grids. The electric power generation grid essentially ignores the US-Canada border. The grids all across the United States were in North and South and ignore the border completely. In auto production, auto production is actually very deeply specialized, partly because NAFTA was preceded by the auto pact. But today, if you look at the US North American auto industry from space, you can find Interstate 75 and Highway 401, but you can't find either US-Mexico or US-Canada border. And that's an important statement about the depth of integration. The point is not the borders don't matter. The point is that we have a bigger goal. The goal is global competitiveness of our industries. That's certainly the principal goal of firms operating in North America. And the point is economic integration moves on and inevitably outgrows its political and institutional framework. And I think 20 years on in NAFTA there's been a lot of outgrowing and that is really what we in the private sector and in government ought to address ourselves to. This combination of a fixed set of rules and constant adaptation and change in this high pressure global market and with restless consumers and with massive innovation, the rules stayed the same and it's starting to show. About three years ago, I was at a conference and the subject of NAFTA came up and my friend Ed Gresser of Progressive Economy made a statement that troubled me. And the statement was this, I think she showed a chart. And the chart looked like Mount Fuji, okay? It was just a graph that showed increased decrease. It was a measure of the share of US imports subject to the NAFTA preference. It started in 1994 and ended I think at about 2011 when he gave the talk. What happened is that good subjects to the NAFTA preference have been declining since probably about 1999 or 2000. Now, the good subject to preference, there was preferential trade before NAFTA. It was the auto pact and Mexico was a large participant in the generalized system of preferences or GSP. So there was about half of imports from both Mexico and Canada prior to NAFTA were subject to preference. NAFTA preferences grew but then started to decline. And that is a reflection more than anything else of the decision making that goes on in a complex high pressure dynamic economy where the rules stay the same. Actually, apparel trade is a good example of this. The apparel industry in all three countries worked very hard to get a set of rules that made sense for it and met political muster in the NAFTA. And that's what happened in the NAFTA. The US market share of NAFTA apparel, so apparel that is produced in the NAFTA region was 7% in 1994 when NAFTA came into force. The share of NAFTA apparel sold in the United States peaked at 18% in 1999. 2012, the share was 4%. So actually, North American apparel trade has a smaller share, NAFTA apparel trade has a smaller share of total apparel trade in the United States than it did before NAFTA. Now, this is just a reflection of, it wasn't that there was a bad agreement at the time. In fact, I think the NAFTA rules on apparel reflected the interests of all three economies at the time it was done. What happened is the world changed. It was just overtaken by a new reality. And it didn't happen all at once. It didn't happen by a policy decision. In fact, nothing really changed in the rules. But one make or buy decision after another, at one company after another, one more workaround led to this circumstance. And that's really where we stand today. That is the opportunity. I'll take Chris Wilson's point on this, which is companies in all three countries are trying to do their level best of drawing on the combined resources of North America to be as competitive as possible in global markets. That is the operating goal and operating policy of every company operating in North America, large or small. Whatever barriers exist are just additions to the transaction costs. And most companies don't really care whether it's a trade rule, whether it's a extended crossing times between Windsor and Detroit, which I think will get shorter at some point, but may not be soon. Ambassador Ridge, by the way, was opened in 1927. So we think NAFTA's old, our infrastructure is old as well. It can happen as Ambassador Borgeski mentioned because of regulation. I mean, look, I think it's still the case. I've only been gone from P&G for a couple years, but Canadian crest is sweetened with saccharin and with cyclomate, excuse me, and U.S. crest is sweetened with saccharin and never the twain shall meet from a regulatory standpoint. Do we have free trade and toothpaste? No, we don't, okay? There's zero tariff, but there's not free trade. So this is this fundamental issue, a fundamental problem of the static nature of rules versus the dynamic nature of commerce is what we need to confront. We don't need more venues to confront it, okay? We have plenty. We had the security and prosperity partnership in the most administration. We have regulatory cooperation councils going on now, okay? We have the TPP, which I amusingly noted to some friends that Senator Barack Obama on the campaign trail in 2008 in the State of Ohio commented that it would be his political goal to renegotiate NAFTA and it caused shockwaves in the press. Trans-Pacific partnership is that opportunity to renegotiate NAFTA. We have a forum for doing it. As Ambassador Hills pointed out, we could take the forum of the Transatlantic Trade and Investment Partnership to also improve the rules of NAFTA. So we're not lacking for venue. I think what we're lacking is imagination, okay? In 1994, there was no such thing as a digital economy and no one imagined what digital commerce would be. In 1994, nobody also imagined that Mexico would open its oil sector to private investment, okay? Things change and we ought to reflect that change. I think that the imagination needs to run both ways. I think the private sector needs to turn its workarounds, which they just do, into a policy agenda, which you need to engage the government about. Secondly, on the government side, I think instead of beginning with the rule, begin with the transaction. When you begin with the rule, that is what's the NAFTA rule today, governing this amount of trade, you first of all assume the status quo, you adopt the status quo, and you adopt the rents associated with the status quo. My preference is let's look at the transaction. Let's look at what two parties want to do voluntarily for mutual benefit and ask ourselves, what's the government's interest in getting involved in that transaction? And there are some, all right? Then the question becomes, what is the least restrictive way for that government interest to be maintained and allow the transactions to happen as they do millions of times every day in North America? With that, I wanna thank you for coming and thank you to the panelists and tell you how delighted I am to be part of this discussion and turn it back over to Ambassador Breschewski. Thanks very much, Scott. We're running a bit long and so I think what I'd like to do rather than have the panelists talk to each other is to open this up for questions from the audience given how patient you've all been. So we have people with microphones at the back of the room and if you raise your hand, they will come and give you a mic and if you'll identify yourself and your affiliation before you ask your question, that would be great. Yes. Thanks so much. Thanks to the panel and CSIS. I'm Scotty Greenwood with the Canadian American Business Council. If TPP and TTIP and the other trade deals are a possibility for fixing NAFTA and enhancing it and also enhancing our trade generally with the world, what are the prospects of actually getting those deals concluded and in place? Thanks. I'll take one stab. I think the administration is very committed to finishing TTIP. They miss this year and deadline, but they will not miss next year. They will conclude it next year. That's my view. And I think the president is extremely interested in fast track trade promotion authority. Our understanding, we've talked about this this morning is there is agreement at certainly at staff level between the sort of Senate and House in terms of the committees on a potential template for fast track. Committee chairman so far, most of the committee chairman not all, seem to be interested in moving this forward. So we'll have to see. But I think there will be very significant activity next year. What happens? It is a by-election. I don't know. And it's a hard vote. But I think there will be a strong push certainly. And most assuredly, I think TTIP will conclude. Sorry, TPP, TPP. TTIP is a longer term proposition. Regulatory convergence is extremely difficult. Having done a number of mutual recognition agreements with Europe, I can tell you from personal experience, it is very hard and acrimonious. Because regulatory regimes in the US and Europe are very dedicated to their regulations. And the bureaucracies that build up around those regulations are very substantial. And each side believes it is right in the way it regulates. So I'm not saying it's not possible. Of course it's possible. But I think it's a longer term proposition. So the agreement I look for is TPP for next year, certainly. I can't make a prediction about the pace of negotiations. I just want to put in two cents on the utility, the relative utility of the agreements. And one of the things that was a challenge for the NAFTA was bringing countries of differing levels of development together. And Mexico really had to conduct a lot of reforms. It really had to work very hard in order to meet the requirements that were set of it in the NAFTA. Looking at the Trans-Pacific Partnership, we have a lot of countries of differing levels of development and some very entrenched positions on what they believe is important. So in terms of the North America NAFTA issues that are manageable within the TPP, I think I'm more optimistic about the TTIP, the European Union Agreements. Because there, although you have two, I will say two elephants who have different ideas about how trade policy ought to be conducted, particularly in the regulatory area, you do have very similar levels of development, very similar commercial practices and commercial interests. And so I think from a Canada perspective anyway, we will get more from participating with the U.S. in the European Union. I just, I don't have much to add, but I want to bring this to the discussion on North America. Some of you will remember that one of the reasons we launched on Canada's free trade in NAFTA was that the GATT talks in those days, the Uruguay Round, were stalling. And the reason they were stalling was the Europeans wanted to deepen their integration before widening their trade mobilization with other countries, particularly the United States. And so we turned to our own project to be able to deepen. I think one of the challenges for us in pursuing trade agreements in all directions is that if we remain uncompetitive, having failed to achieve that single market here in North America, we'll liberalize ourselves to European Asian companies that have the benefit of large economies of scale at home to export here, keep their jobs there, and potentially really put some strain on the North American economy. We don't have to face that at all. We have the time now to think about how to carry NAFTA forward, how to make ourselves very competitive so that when we liberalize further, we're really going to be able to take full advantage of that. And that's where I think these two discussions should be linked, but we are, as people have said, sort of separating them. And I think that's artificial. Questions, please. Gentlemen, right here, third row. Hello, my name is Jose Palito, and I work for Mitsui and Company. There's been some talk about reshoring, manufacturing reshoring from Asia to North America. Does NAFTA have the tools necessary to facilitate that? What needs to change? How might NAFTA respond to that reshoring? Thank you. Looks like a job for Christopher. I mean, the process is underway because of changes in the global economy. Things like rising wages in China, high transportation costs across the Pacific because of high oil prices, changes in currency values. So the trends that have been pushing this reshoring, which is a benefit to all of the countries of North America, have been coming from external factors. We have the opportunity to continue that trend with internal, by implementing things within North America. But that's something that we still need to do. I mean, of course the NAFTA is there and it provides a framework that allows a certain degree of production sharing, of manufacturing throughout the three countries. But to deepen it, I mean, one of the single biggest things we need to do is lower the transaction cost at our borders and that's something because as Chris talked about, I mean, this is something that's actually increased since NAFTA in a large respects. I mean, the tariff barriers have decreased, but the wait times at the border, the infrastructure, we're trading on infrastructure from 50 years ago when our trade levels between the United States and Mexico are five times what they were before NAFTA. So we need to change the way that our borders function so that they don't become an artificial barrier that's growing over time to this joint production system and things like that would be the way to further encourage the trends that we've been lucky enough to experience from just sort of the winds of the global economy. I agree with Chris's comment, but be cautious of using the word trend. Trend presumes that something will continue. Okay, there is certainly the case where tasks within a supply chain have been conducted in Asia and are relocating to North America. That's because of a lot of underlying conditions, mostly labor costs in places like China which have increased by I think a factor of five since 1990 and increased transfer costs as fuel costs rose. So there are some dynamics which are not permanent and can be reversed. There are also some policy implications for this and I would agree totally with Chris that need to be taken advantage of. For instance, Mexico made a very important policy change that it didn't have to negotiate with anybody. Unilaterally accepted standards of conformance, particularly on electronic products from any established body. That by accepting certification from any known standard center, okay, they opened themselves up to being able to participate in assembly chains and supply chains that before Mexico rules actually prevented the importation of components that didn't have local certification. So there's a lot that can be done with global value chains that is essentially a self-help program. And Mexico has found, figured that the self-help program out and is implementing it. The more of that we do and the more we do our own self-help program and things that Chris mentioned like infrastructure and border thickness, border efficiency, the more we have the opportunity to capitalize on this. Yes, I'm Ed Gerwin. I'm an international trade consultant. I think the panel would agree and most observers would agree that NAFTA has been a success economically. But the critics seem to have won the public relations war on NAFTA. As we talk about a reset on NAFTA moving forward doing new in different things to reform it, what would your advice be on a new public relations approach to selling NAFTA, rehabilitating its image and emphasizing the benefits to citizens in all three countries from an expanded agreement? It is really easy to criticize NAFTA in a 30-second sound bite and really difficult as you know to describe the nuances of international trade benefits in that same 30 seconds. I think not just in the United States but across our region all politics is local politics. And so in order to rehabilitate the NAFTA reputation I think you take it down to the local level and you find the companies that have been able to trade across borders, the companies that have been able to overcome local downturns in order to benefit from greater regional opportunities. You take it to the untold stories of regional prosperity. I mean the trouble with the Canada-U.S. relationship and also the great benefit of the Canada-U.S. relationship is nobody thinks we're foreign. So nobody thinks that trade between Detroit and Windsor is international trade and a byproduct of the NAFTA. So I think it's locally focused stories and also engagement with our local governments, municipalities, states, provinces. I can answer very quickly. I would be unabashedly political in the way that I would use China as the new scapegoat. I think that China is the new Mexico in terms of where we fear that our jobs will get lost to. And so I wouldn't, you know, but there's a level of truth to it also which is to say that what we're doing now is we're competing on a global stage. And in order to compete on a global stage, we need to work with our partners, our partners in production, our Canada and Mexico. So we need to work with them to win that fight. Well, this is not maybe good PR, but maybe a story we haven't told enough of. One of the things I made Canada-U.S. free trade and NAFTA really, I think, pathbreaking agreements is that they weren't like the auto pact, a trade agreement that benefited a handful of companies and kind of excluded other people, including people who wanted to sell their used car across the border couldn't take advantage. It was a limited agreement. But Canada-U.S. free trade and NAFTA were for everybody, including the small, medium-sized enterprises that didn't have big lobbying shops in D.C. and nonetheless got to benefit. I think we need to think in NAFTA 2.0 about how to keep the focus on having as many winners as possible. That's why I think labor mobility is a great thing. Yeah, it seems worrisome at first, you know, well maybe they'll be a Mexican to take my job, but I think what you have to focus on is, look, your kids in a tough economy could go to the oil sands of Alberta, they could go to Toronto's financial center, they could go to Mexico City and take advantage of whole new opportunities. I think what Chris has talked about, the educational exchanges to sort of create more opportunities for our schools to educate. We've got the best universities in the world here in the U.S., and I don't teach at all of them, Ambassador Borzevsky, but we do have some great ones. And we should really be proud of that. There are some very positive things here, and that's why also I think we should do full mutual recognition on regulatory standards and say, we're gonna have full mutual recognition by date X and negotiate the exceptions. And I will one step further, not to be too libertarian, I think we should do what Europe does. At a time of tough budgets at the federal level, really in all three countries, what we should do is focus government on setting standards and let the private sector, private sector engineering companies set up to do compliance verification, lab testing of products. We always talk about the car that gets crash tested three times for three governments. Well, we could do it once by one company that responds to published standards and presents those findings back to the government and in the process, the private sector can not only capitalize testing much more quickly than the government can, but we'd create a lot of STEM jobs and that would be a tremendous thing for our economy. Europe does that, we could do that. So things like that, so that people see that being part of North America is a win for you as an individual, I think would help sell the agreement. Well, look, it's a tough question. There was no giant sucking sound. Al Gore won the argument, Vice President Al Gore won the argument against Ross Perot on Larry King and time has moved forward and Larry King is no longer on the air, but NAFTA still is the serving bowl of discontents for all the trade opponents in North America. I think all I can say is we just need to do a better job of helping people understand how we really interact. Laura's point rang true about people don't think Canadians as foreigners. I remember being at a Chamber of Commerce meeting as a guest somewhere out in flyover country and took a show of hands and said, how many people here have international operations and some hands went up and how many of you sell things to Canada and more hands went up? So there is an issue of threshold awareness here that I think we need to do a better job of. I also think we have a moment when small businesses have the lowest trade costs ever. If you are reaching consumers, customers on eBay, you are handling transactions, financial transactions through PayPal and your customs broker and freight forwarder is a company called FedEx or UPS. You have the easiest, lowest cost way to reach a foreign customer base than ever in recorded history. That's an important opportunity because it means there are one person businesses who are international businesses. Never happened before, it's happening now and we just need, those of us who believe this stuff need to do a better job of it. Questions, yes? Good morning, I'm Mary Ann Rood. I represent the Canadian province of Manitoba here in Washington. And I find this all very hopeful and optimistic NAFTA 2.0. But I'm wondering, how do you propose getting congressional buy-in so that there isn't further undermining of successes that we've had? There's been several examples of this. I'll say the dirty phrase of country of origin labeling. Post NAFTA, we were doing a tremendous job making something together. We were making pork chops together. But country of origin labeling and the impact on livestock trade has dramatically decimated that. Efforts in Congress to introduce renewable or clean energy standards, none of them have passed, but Scott mentioned earlier the north-south flow of the electric grid. But despite that, the existence of that grid and the existence of the electricity trade, the proposals for renewable and clean energy standards all would have differentiated between imported and domestic electricity and not given them the same treatment. So while there's a lot of hope, I'm wondering how you propose to tackle that front. Well, I'll, I'll just tell Alexander Hamilton and recommend energy in the executive. I think to the extent that the president and his administration has an ambitious, active agenda, Congress has a lot less time for mischief and they have to deal with the agenda he's setting. So I would encourage that. I think that now if the president pushes hard for the Trans-Pacific Partnership and TTIP, we're gonna worry a lot less on green cards for cattle from Canada. And the other irritants, which always creep back in and always find a robust audience. So I think give them, give them more than they can deal with. This is probably the best solution we have. I can't overcome it. The dead hand of local politics is very heavy on this process. If I could just make a comment. Look, having the NAFTA doesn't mean there aren't interest groups with specific demands, with political clout, with money, and with determination to see through an issue. That's politics. That's the nature of the beast. It will always be there. It's there with respect to every one of our major trading partners, right? The lobbyists for Europe and individual European companies who want certain things for, we can go around the world. So I take a very practical view of this, which is if there's an issue that upsets you, you try and get in the fight as effectively as you can. But these issues that you indicate aren't going to go away and they won't be resolved by agreement. There's too much, or if they're resolved by agreement, the resolution will be unsatisfactory, I would predict. Because you gotta let steam come out of the system. You have to let people have their say. And a number of these kinds of issues are quite neuralgic. They've been around a very long time, pre-NAFTA, during NAFTA, post-NAFTA, and they'll be around, I think, in the future. And I don't think there's an easy fix. I really don't, just as a practical matter. We can say the administration should take a tougher line. Why? Think about it from their point of view. And all that there's on the plate of any administration, not a Democrat, but Republican, whoever's president. Is cattle certification a big issue? No. So I think you have to be realistic about what can be achieved and do your best to defend your interests and get in the fight. But I don't think the issues go away because of the NAFTA, or because we'd like to see NAFTA renewed further. Perhaps to pick up on the gentleman's question, I was thinking about Scott mentioned David Ricardo, and it's always good to mention the greats. But if you go back to Ricardo, he doesn't really talk about trade. He talks about intercourse among nations. Now, if we could get a whole generation focused, don't get in the way of intercourse. This could really, especially intercourse with cattle. I mean, this could be big. Please, Laura. Dialing it back slightly, although I will note on that same theme that Canada is one of the largest exporters of animal genetics in the world, including cattle and pork. But on the issue of irritants versus things you can fix with rules, some of the things that the representative from Manitoba mentions are things that are resistant to containment within a rules-based framework. I'm not sure that country of origin labeling could be something that could be dealt with in a NAFTA, but I know something like the Buy America issue and the issue that Canada had with sub-federal procurement. We were told, well, you guys should have negotiated sub-federal access in 1994. You had your chance, you blew it. This is the problem of having an agreement that isn't upgraded, that isn't evergreen in some way, shape, or form. So sometimes you've got to dust up and you've got to get in there and fight, and sometimes you can contain some of these problems within an upgraded agreement. As Scott said, this bear is repeating. Rules are static, but the environment is dynamic. Selma, I've been waiting for you. And this is for you. No, I guess while we're having a reality check, if we go back to your comment about former Senator Obama saying that he wanted to renegotiate the NAFTA, I don't think that was a positive statement. I don't think he wanted to renegotiate the NAFTA by addressing the TPP, but it brings me to the labor issue, and I think, Charlene, you may be best positioned to address that. And then it's how do you see that labor issue evolving in a positive way? I mean, I remember we fought tooth and nail to see that that didn't get expanded too much, but now it's kind of a reality of every trade agreement. I don't believe they're ever gonna get organized labor to support trade agreements, but to give coverage to members that can support trade agreements, perhaps you can just highlight how we're moving on the labor issue so that it can be incorporated in a positive way into trade agreements. And I also wanna make one brief comment about rules being static. I don't agree with that. I think rules should be negotiated in a dynamic way so that when Congress does rules labeling, we can like we have in the past and will in the future say, no, that is a violation of the rule because the rule is a liberalizing rule, and if you have a too strict of labeling requirements, you've actually violated the rule. But in any case, that's another debate. Labor issue, please. Well, let me, if I could tell them if you wouldn't mind. I think maybe Chris might have something to say on the labor related issues, given supply chains and co-production and so on. And I don't know, Scott, I know you've previously talked quite a bit about labor. So if I could turn to them first and I can round it out if that's needed, but. I think, let me just bring a brief comment about the provisions in trade agreements. I think we've actually come a long way in the treatment of both labor and the environment in trade agreements. You'll recall they were side agreements in the NAFTA. And every trade agreement has made progress at trying to accommodate the concerns and do a better job of making sure the agreements themselves were robust and offered the degree of protection that was sought. Now, what we haven't done is gained support. Although I would note the AFL-CIO made some very positive statements about the TTIP. So they're not beyond support and we've made a lot of substantive progress. If you make things together, you tend to make them in a way that enhances the opportunities for labor if not necessarily the standards for labor. I mean, I think that obviously the sort of macro change that's happened that plays into this, although it obviously has not shifted the dynamic on labor yet, is the importance of inputs in the production cycle of imported inputs. So I mean, to the extent that companies and industries at large, including the workers, depend on imported inputs that are competitive, you're generating more advocates for liberalization of trade. So I think that some macro dynamic that's still playing out, I think in the long-term that does spell the, it opens the opportunity for a change in the discussion, but it's something that's happening very, very slowly over time, I think. I just wanted to make the quick point that labor unions can also be dynamic. In Canada, we have a situation with labor shortage in particular in the Alberta oil sands and we have been recruiting workers from the United States. It's relatively easy to come into Canada on a temporary basis if there's a demonstrated labor shortage. What's very difficult is getting certification for recognition of skills for particular skilled trades. And so the labor unions, the counterpart unions on both sides of the border, like the AFL-CIO, have said, we would really rather that you're using union members from Canada and the United States, rather than non-union members from other countries. So we are gonna certify the skills that are obtained in Wisconsin to help that worker get to work faster in Fort McMurray, Alberta. So they've actually been fairly enlightened on this issue. I think all I would say is that you can see from the rhetoric over the immigration debate in the Congress, including the use of high-skill labor, how difficult these issues are politically for members, whatever your view is on the underlying issue, and to the extent the view is that movement of personnel means movement of low-skill labor across borders. The concern, including from big labor, becomes even greater. I do think that Chris made a very important point, which is given the nature of the global economy today, given the nature of competitive strains in the United States, as well as in North America, given the rise of the Asian economies, which are fiercely competitive. We do have greater room now for discussion of the movement of personnel than we did previously when many of these factors were not so apparent. In other words, the nature of global competition is so fundamentally different now from when NAFTA was first negotiated that at the time, politicians didn't see the need for the movement of labor. The situation's very different today, so one would hope that the current economic environment would leave space for people to begin talking much more rationally about the need to move labor at its best use, and that's acutely a need for co-joined production chains. For example, it would be an acute need in the case of joint R&D, both at high-end labor but also mid-level labor. So I think there's a little more room today for discussion, but I think we see from the debate on the hill and comments made that it is a very difficult issue politically, it remains difficult politically, despite the obvious need given the external environment. With that, let me add my thanks to Ambassador Barczewski for her moderating skills to the panel and all the speakers, and thank you for attending this morning.