the democrats will have their talking points about strengthening the economy.democr talking points about strengthening the economy, as the congressman said about the millions of people who are being helped by obamacare, this will get played out in the campaign. we have a question from the audience. do you think it is possible to convince an urban legislator to vote for a farm bill that will make significant reductions on the level that house republicans have talked about which is more than $40 billion of cuts? do you think that urban legislators in the house or in the senate would ever go along with something like that? >> those cuts will be let mecally reduced. also add for the farm bill in general, there are also disagreements between the

different commodity groups. the link itng at payment to farmers, and i hope they can do that. the perspective of an urban legislator, it is one of the few programs in the federal government were we get a disproportionate share in minnesota. do quite well in terms of money flowing to the state versus many other programs. >> another question from the audience related to the farm bill. you are talking about how much larger it is in terms of number of people. do you see potential for some significant structural reform? aey want to know maybe about

shift toward some kind of cash transfer. that is a great question, but i don't know. around to get our arms and we are in the fifth year of an economic recovery. the president has raised the issue of the income disparity. it is a fact and something we have got to come to grips with. from my perspective, we have to understand how and why that happens. more importantly, from my perspective, we need to find out whether or not the federal government and federal policies are at least in part to blame for that. >> one of the unique things about the food stamp row graham -- program is that it is

universal for low income people and it is tied to food products. -- otheret times where programs like the housing program where a small percentage of eligible people end up getting assistance for housing. distanceignificant whether you qualify or not for that kind of income supplement. one of the virtues of food stamps is that people qualify it in a general basis. in, theeconomy we are truth of the matter is that i overed the subcommittee nutrition programs. i will not take responsibility because it was done by other people. but we moved away from the paper stamps of debit cards.

it had become almost a counterfeit currency in some areas. is a much stronger general economy. when the real unemployment rate was down somewhere just north of three percent, we saw numbers collapsing on these programs. is what we have to be talking about. building businesses and jobs here in the united states. having a booming economy again, i think it is keeping that from happening.

>> the nature of decision-making in washington, the currency and the debt limit has created a depressing effect on economic growth. back to an issue we haven't really talked about that much. there are a lot of democrats they will never be cut off from unemployment. >> i hope that they find some way to extend unemployment comp.

>> but what we do about the long-term uninsured at this point, i'm sorry, the long-term unemployed? havethink you almost to define it geographically. look at areas, for example, in the coal states. in eastern kentucky, something of 130 minds of closed down. the idea that you could have job training programs and turn them in the computer programmers, i have always believed it is sort of a fallacy. i think that there may be room for compromise on a geographic or economic basis.

probably increasing the unemployment rate. the longer they can draw benefits, the more choosy they will be. we need to get back in the unemployment full. >> days like minnesota. there is also a set of rules

aat both parties tend to play no holds barred government wetdown sort of thing that have seen in minnesota. in the legislature, it has gotten us to this point where anything goes. tougher. get i was part of it. if i were going to point to some things specifically that changed the atmosphere a little bit from understanding of each other's positions as a to wouldine partisanship, i

say the marti law that, specifically for those in know, it that don't prevented individuals from getting together in the forslature and going out supper, getting to know each other. been sponsored by an interest group or a banking group or whatever. all of a sudden, it was ethically wrong. people on thenow other side of the aisle or in the other body, it is more difficult and easier to be harsher to them. i think honestly, just the politics part of it -- there are so many districts that are all democratic or all republican.

when all the challenges ,nternally, with the caucus endorsing candidates on the democratic side, they changed to the republican side. problems. it did take place. >> did you find when you were speaker or leader that the type of people showing up and becoming part of the endorsing had a more intense commitment, uncompromising to e issues they thought that were most important rather than to the party itself and winning elections? >> there was probably less balance. that is not just republican

caucuses, it is democratic caucuses as well. the system attempted to bring out those that are more passionate and less compromising and may be balanced. >> i want to pick up on this point that the speaker mentioned. the power of the party activist was a single issue advocate. and you have seen it rising, making it harder for democrats to vote for compromise that would step on toes, such as the entitlement programs. >> many more than when i first

started in politics. that is a constitutional right. lots of them appeal for money from individuals. across the political spectrum, the mailings they sent out to there is no ambiguity about what is right and wrong. >> if you were chair of the budget committee today, having to deal with the very well organized and very intense and capable groups, does that make your job is chair harder? agree?ou is this a democracy of glorious

onms and also a constraint reaching some of these agreements that we are talking ?bout today at c that it was true when she was in the legislature that there was a good deal of socializing between republicans and democrats. we got to know them on a more personal level and i never felt that my vote could be bought for lunch.ce of a dinner or that it has,elieve in some respects, contributed to the less civil behavior. it is really hard to call someone a name if you have spent time with them. you have got to know more about their family.

i strongly agree with what the speaker said. we have seen an enormous proliferation of groups which i would go so far as to say are not slavishly bound by the fax. factselectively pick about this issue or that issue and they have become incredibly effective at communicating that message to that group. a balkanization of the country of all these various groups and you overlay that in the sense that the way people get their information and how they perform that function. differente so many ways people get their news that them watchery few of the nightly news. they may have

their particular cable news network that they prefer and it is pretty obvious. outlets tend to have their own point of view and have their own story line that they pursue. combine the fact that they don't get together or socialize with geometric development of these interest groups and the balkanization of our whole media -- does that thing get better? committed ultimately will prevail, even against these almost insurmountable objectives.

and kids of other members say that does not happen. the last plane possible and the first plane out. talking to people, i see somebody up at the chair presiding. it is just dramatically different.

to add on to the congressman's persuasive list of that one offactors the challenges is the nature of our nomination process? >> it reflects what people think in the district. that is reflected whether it is the caucus or the primaries. >> you're living in the southern part of minnesota. you have been going to your precinct for many years, decades. do you still see the same set of people? bringingre a crowd their way and? >> you want to broaden out and branch out.

want to be inclusive to any party. when you go to your local precinct caucus and fight to become a delegate, it has happened. of the realne thesenges in minnesota is resources have figured out that going to the precinct caucuses is a great way to get leverage over them. >> they are using involvement and participation. you mentioned the tea party.

>> these single issue advocates have already played itself out. as we head into 2014, should we expect to see a continuing level of strife? or have we turned a corner where there will be some real movement in appropriations, perhaps ororm related to food stamps other issues like immigration? >> things don't move much until the end of the session and there are pressure points.

we will always find more activity will have legislatively as you reach a pressure point like the budget or the debt ceiling. those are times you will see action. >> i don't know how long we will -- there are real

philosophical differences. that is going to create friction. you of something we were told in a bipartisan retreat one time that i have never forgotten. what we do every day on the floor of the house of representatives is a substitute for civil war. you have to assume that there will be friction. assume that ultimately strong people will rise to the occasion and we will ultimately move ahead together. that whilegree friction will remain, the pressure at the end of the session, the election in someber, we may well see touchdowns here, perhaps

immigration reform? or some other big scores? >> it would surprise me. they be immigration. immigration. that the appropriate appropriations number set, that process will work itself out smoothly. if leadership lets it happen. they can finish that work and be done in september. to see lotsurprised and toughsibility political issues dealt with the congress this year.

>> the zimmerman -- very capable people that have put on more than three dozen programs this year. tend to be a bright and optimistic guy. i would say the northern .uropean skepticism i will tell you there are lessons that were learned.

,nd whether it be immigration you cannot govern from here. we have a historic, even though i want to thank everybody for coming.

>> he was asked about gm's announcement last week that mary would take over as the company's chief executive. >> the significance of the first female ceo, it is a big deal. what do you see as the --nificance >> i think she was picked on her hard work and success, not because of her gender.

i am proud of the history the general motors has in terms of promoting qualified minority and female employees. we do that because of science and technology, engineering and math. the woman that runs manufacturing and engineering. runs our woman who supply chain. these are all ladies that serve on the executive committee.

had their own surface academy. she went to stanford. >> i wish you both a very happy christmas and a bright and prosperous new year. >> would you mind autographing some of the seals?

it is one of the things i do best. >> my father gave it to me. >> influence and image, season two. weeknights at nine on c-span. >> we will take a look at u.s. trade policy and proposed trade agreement with the european union and russia. global business director for bloomberg government. small business for sensible regulations.

washington journal airs live every morning on c-span. january 1 marks the 20th anniversary of the enactment of the north american free trade agreement. created with the aim of connecting the economies of the u.s., canada, and mexico. they discussed the agreements significance and impact. the talk was hosted by the center for strategic and international studies. it ran about an hour and a half. >> thank you for that very generous introduction. thank you for coming out when it is freezing cold and it is only this gorgeous building.

this building is very special. it is wonderful to be at csis. scott has already reminded you signedesident h w bush the trade agreement in 1992. effect byned into president clinton in 93 and became enforced in '94. experience, the question that scott has put to me, what has significance for the future? making this assessment, i think we need to be clear about what the agreement actually did.

it was the first comprehensive trade agreement to join developing and developed countries. reaching wider and deeper market openings. industrial goods guaranteeing unrestricted agricultural trade between the united states and mexico. opening a range of services including financial services.

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. of the market agreementhat this created, the activity between thethree nations exploded. ,ingle largest export market 98% 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.

a highly efficient and integrated supply chain has developed among the north american economies. interregional trade flows have about 290 billion dollars in 1993 and over $1 trillion in 2012. more than $1 billion a day cross our southern border. about half of our trade with canada and mexico take place between related companies. and the resulting specialization has increased productivity in all three economies. we not only sell things to one another, we make things together.

quite remarkably, for every , $.25 of u.s.s input is in canadian goods that come across our border. and $.40 of mexican goods is u.s. content that comes across our border. and with china, it is four cents . mexico has made a substantial investment in the united states signing the nafta in sectors of cement, bread, dairy, and retail . and u.s. investment in mexico has grown substantially, about half of it in the manufacturing sector. most of that in the auto sector. and much of the output in our investments in canada and mexico

come back to us which add to our competitiveness and production of final products. canada has invested about $200 billion in the united states which makes it the fifth largest investedand we have $310 billion in canada to become its largest investor. this really remarkable growth that can be traced to the opening of the regional markets, the agreement still has critics. most that attack nafta focus on mexico, not on canada. we claim that the partnership is one-sided. that the agreement is mexico's

gain and america's pain. naftaving mexico as a partner has served u.s. economic interests extremely well. last year, 13% of our nation's total exports went to mexico. sales toucceeding brazil, india, china, and russia combined. mexico buys more goods than all the rest of latin america combined. goods bought by germany, great britain, france, and the netherlands combined.

i think it is generally agreed that the market openings created a substantial increase related to exports. 25% more that 15%- are domestically focused. and with 113 million consumers with purchasing power of over $1 trillion, mexico offers that areties a quite substantial to entrepreneurs whether they be large or small. a large that particularly benefit from mexico's proximity and it has opened up to our trade. mexicans purchase 11% of the by small andced medium-sized enterprises that 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 on u.s. goods. thatconomic integration 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. the rest of the world is not standing still. supply chains circle the globe. states has proliferated. continuing to open global markets to investment ideas and people originating in this hemisphere and ensuring that our supply chains work at maximum efficiency. there are actions that we could take that would maximize

opportunities to build on the nafta platform and create new commercial opportunities, cut costs, create jobs, and generate substantial economic benefit of all of our citizens. benefits, wee the can assess the potential benefits not only from a national basis, but from a regional basis lest we lose substantial opportunities by platform.the nafta it was a positive development that will better enable us to take positions and maintain the competitiveness of the north america region. as we move forward to negotiate the transatlantic trade and

investment partnership with 28 states that comprise the european union, we would benefit substantially from having mexico and canada join those negotiations. for doing soeason is very persuasive. it would strengthen the agreement, give it more have to buy at a 100 50 million consumers and $1 trillion in gdp, thus expanding market opportunities. would reduce the complexity if the neighbors are excluded. mexico already has a free trade agreement with europe and has had one since the year 2000. canada announced it negotiated a trade agreement this past october. having to deal with three separate agreements with different rules of origin would not only create a headache but unnecessary cost burdens for consumers.

it would erode the unique and hugely beneficial economic integration that we have as a result of nafta. having all three north american governments purchase a paid in the negotiation would give us all an opportunity to upgrade and expand nafta. haveficant advances occurred in the area of data flow, telecommunications, and other areas not on the table when we negotiated the north american free trade agreement. it would provide us another opportunity to provide greater regulatory coherence. between the u.s. and europe is about three percent. in some areas.

it is burdensome and quite different on both sides of the atlantic. it facilitated president pena's economic reform that we so strongly support. pointing to the benefits that mexico could potentially gain from this mega agreement to be rather similar to how president salinas used nafta to begin economic reforms. as we move forward in the 21st century, we need to take steps.

we can educate populations about the 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 america has to come. time than thetter 20th anniversary of nafta to move forward on this. i am grateful to csi ask for picking up the banner and starting the process. iank you for being here and look forward to listening to the panel. [applause] >> i would like to invite the panel to come forward.

we have several experts in the north american region to discuss this topic today. --m delighted to be joined ambassador hill made the comment that a lot of people would like to do this very thing. that.l do my great pleasure to turn this panel over to our moderator. the ambassador is our senior international partner. and as both her priority government service and after government service have helped with thenesses deal

north american free trade agreement. thanks so much, scott. let me start by congratulating carla on her remarks and for her tenure. let me also say that every organization builds a new building. the peterson institute, new building. council on foreign relations, new building. csi ask, new building. csis, newe -- building. if you live here and think we're in decline, that's why. you for yourthank work on nafta and so many trade initiatives. i thought i would make a few remarks.

let me also it knowledge another and one of the great people of washington, truly. whate start by recalling kennedy said about canada. it applies with equal force to mexico. john kennedy said with respect to canada, 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 is nafta. said, it is deeper than

any previous free-trade agreement. they began to tackle issues of labor in the environment that were new to the trade agenda. between theirst developed and developing country. robust enforcement that was a precursor to the wto at the same time that they fail to have. overall, they have more than tripled since the agreement took topped theit trillion dollar mark for the first time in 2011. mexico, two-way trade has surged over 500%

compared to half of that for non-nafta countries. enduringne of the most contributions to economic competitiveness. growth.mpanying today, more and more manufacturing processes span both sides of the border and factories are able to achieve greater economies of scale. mexican per capita gdp more than doubled and we have seen a fivefold increase 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 darted from a very high base. number oneady our trading partner when nafta was negotiated.

increase is saying a lot. if you look at specific sectors of trade, the agreement with canada has proven extraordinarily beneficial on both sides. agriculture and two-way trade has tripled compared to non- nafta countries. and today, canada is the single largest market for u.s. agricultural products. mexico is number two. nafta has been a resounding economic success and has enhanced north american competitiveness and cooperation. there is quite a bit of room for improvement. korea is a good example, a chorus of agreement with far more robust disciplines in areas

like state owned enterprises. addressed ther 21st century challenges. there was no internet when it was negotiated. social media, there was no social media. cross-border data flows, not an issue. biotechnology was not an issue. nafta is beginning to show its age. and without repair, it will erode. there are also areas where nafta hasn't achieved its promise. i.t., canada has provided innovative pharmaceutical companies with only a very limited right to appeal marketing approvals for generics. canadian courts have been

opposing very high utility requirements for patents, discriminating against innovative pharmaceuticals. canada was on the ip priority watch list with russia and canada. canada has since graduated to the ordinary watchlist, but come on. nobody should be on any watch list areas like this. these deficiencies need to be cleaned up. another area is security related and security restrictions on the flow of goods and people. 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. many items that are and should be on the trilateral agenda to ensure that the foundational status is maintained for the good of all three countries. it would be unwise and unnecessary to reopen it formally. i don't see any particular point in that, but if think there are four main paths for building and updating.ess first, targeted solutions for specific outstanding irritants in the trade relationship. movement of personnel is an example. obama administration should rededicate itself to effectively forums including the forums it self has created

which have been underutilized and are not yet producing concrete results. we should make incremental improvements including chapter updates of agreements as needed, particularly where those can be implemented by regulation rather than legislation. bese kinds of updates can negotiated in the existing forums and working groups and can take their cue from more recent fta and agreements on the table. use it as a vehicle to enhance nafta discipline. canada, mexico, and the u.s. are all parties that would involve services, investments, competition policy, and the range of 21st century issues. imposes a higher

standard, i think it should be the governing discipline in north america. where it conflicts with nafta but does not impose a higher standard, the nafta parties should negotiate as needed to resolve the conflict. this approach would make it possible to dramatically improve upon it while maintaining its primacy in north america. we can use it as a potential template for enhanced talks on regulatory harmonization among nafta countries. to a certain extent, regulatory talks are underway in the forums that have been created. they can provide a much more robust example and provide a template for accelerating and deepening regulatory reform. strategies, targeted solutions, chapter improvements,

the agreements can in sure 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 will facilitate greater consistency and treatment and outcomes and avoid the regional balkanization of trade. convergence will help guarantee the future of north american competitiveness globally and ensure that our trilateral partnership remains robust and forward-looking. would like to turn to our distinguished panelists that i will now introduce. left is the on my founder of an ottawa-based consulting form specializing in investment in regulatory issues.

she was previously a senior adviser on economic affairs in ottawa and also keeps one foot in academia serving as a public policy scholar. second is chris wilson, an associate at the woodrow wilson center where he develops research and programs on racial and economic integration. he is also the author of working together, economic ties between the u.s. and mexico and is co- author of the state of the border report, published by the wilson center. our third panelist is another chris. senior fellow at the hudson institute or he specializes on u.s. canada relations. at johnseaches

hopkins, the american university school of public affairs, the state department's foreign service institute and at the department of homeland security. he is a frequent commentator on print and on television. last but not least, our captain. scott is senior advisor for international business. 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. and ao served as liaison state department advisory committee on international economic wallace he. he has been and remains a leader in our field. so please, laura.

think if you will forgive me a minute, i will catch my breath and be dazzled. it is quite an honor that these two women have led the united states and canada through many important trade initiatives and it is a bit overwhelming for a trade professor to be the third speaker. scottd also like to thank for the invitation to speak this morning and putting this program together. it is lovely to see so many friends and colleagues from canada, mexico, the united the naftais is like all-star team in this room. if i say anything wrong, please throw something at me. we are here because we were

involved in the creation of a report commissioned by the government of canada. we were 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 comments made by ambassadors this morning , nafta was and is a very successful agreement. establishing a framework for regional trade agreements when there were few, if any models prior to that. but as both of our speakers have said, it is an agreement that needs updating. it was negotiated before the internet and deals very little with energy issues which are so important to all of us.

digital transfers, movement of people. i like the european union agreements. nafta doesn't contain a mechanism for continued growth. there are the working groups but it wasn't an over arching enforcement mechanism that would force us to move forward. the fact that we did do a good , combined with the really bad press that nafta received in the u.s. has made it difficult to promote a robust agreement. we have moved on to stopgap measures. one of the things that we have adopted is a series of rules where on important issues, like

regulatory operation, rather than the parties sitting down and having a robust and meaningful conversation -- yes, we do have trilateral agreements from time to time -- but we are dealing with this in a bilateral context. some would agree this is the best way to do. debates with my canadian colleagues. for example, the regulatory process, the beyond the border process has made some strong progress in the last couple of years. faster bilaterally then we can move trilateral he -- trilaterally. gas.t is running out of i don't see that there is going to be life in the agreement past

2014. maybe i'm wrong. i think it order to maintain the political momentum and the impetus for the agreement we -- trilateralt or ize them. fastests one of the growing economies with a growing middle-class. they are the engine of growth for the region. they are an emerging market. india are and interesting and important. but mexico is important. ofant to focus on the focus me's.

i argue that nafta was the agreement of big business. barriers movege out of the way, we lack a business consensus which continued to push for progress and a deepening and a widening of the agreement. why? these enterprises are too busy to lobby on behalf of of new initiatives. also, the work that we need to of non-tariffrea barriers. inspections, things that are not joyously difficult out.ot what we need to do is reduce the transaction costs by getting rid of these nontariff barriers. some of them are small and medium-sized enterprises.

there's an opportunity to trade into the nearest markets and all the world. i believe it is a platform for the region's competitiveness throughout the world, asia, africa, etc.. i also believe that it is very important that our three government exercise the leadership and pick up the lag for the small and medium enterprises to reduce transaction cost to make it easier to function in an integrated market. that chrisr published, we recommend ization.al

to have a mexican representative attending some of the canadian meetings. going to someian of the mexican meetings. we need to find consensus where there is consensus on some of these initiatives to bring the sectors together. similarly, we would like to see that move forward with the border and it shifts -- initiatives. there are important issues to be considered an economic benefits that could be derived from rationalization and cooperation on our multiple borders. -- recommending harmony were harmonization as possible. and the ambassador already outlined some the ways that we can do that. i will not 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 are theada and mexico bird in hand. we got them. now we are going to get asia. we also recommend more intense focus on infrastructure, cooperation, not just on building things together, but needs assessment and feasibility. human capital. that is our way of saying movement of people and labor mobility where possible, investments in research and development. and energy. we need an energy dialogue which focuses on ways to rationalize movement and distribution of energy. and there are ways to really capitalize on the fact that our region is unique in the world that we are self-sufficient in energy and we have things to trade certainly. the fourth point i have has to do with leadership. in my original notes, i said

that we in leadership from our three governments, in order to get a north american competitiveness object of the road ash and i suggest there is incremental ways to do that, but unfortunately they stole my thunder this morning. herald,ead the miami spanish, john kerry said he is going to deepen the north american trading relationship with canada and mexico and other north american trading partners, and that this initiative may be flushed out in february. , our worksay hooray is done. >> spots eva. you.k considering whether to deepen the partnership there

are two ways that you can think about the question. one is to look back and see what it is done and say was nafta a good idea. it was the integration a positive for the region. i believe the answer to that is yes. agreement ishe seen and public eyes as very contentious. there was a sucking sound of jobs that may or may not have happened. or we can take a more forward looking approach. and we can say where we are now is fundamentally different than where we were 20 years ago. the decision on whether or not to move forward is fundamentally different than whether or not to ago.e nafta 20 years that is the approach we have taken, and it is a much more

forward looking approach. that is important. the relationship is fundamentally different. nafta did not just expand the trade between the three countries. it also deepened it in a profound way. this creation of production sharing, joint manufacturing platforms, that means that we trade materials, which means we are building products together and not just selling them to one another. that has deep implications that the competitiveness of our countries depends on the competitiveness of the other countries in north america. if mexico improves productivity in the manufacturing sector that means that there are better impetus to be used in production in the united states. that means if our products are more competitive that means they're more competitive in china, in europe and the rest of the world.

we are linked together in competitiveness in a way that we were not linked together 20 years ago. that changes the way that we look forward in asking questions. question, given how deeply connected to the manufacturing sector is, what can we do to boost the industry? is how the key question, to make north american exports more competitive on the global market. i think there are some things that we should look at that are happening right now. there are some new changes right now that will guide us in some new directions right there. ismuch of what north america -- the trade in north america is about the coproduction of manufacturing. i think it is important to reflect on what is happening right now the world of manufacturing. we talked about that today already about the changing nature of the global trade in architecture and how that demands that we update nafta.

there are changes in the way that we are manufacturing products, in technological advances that demand that we rethink an update nafta. i mean advanced manufacturing, the industry's use of manufacturing in the production cycle. what that means is that of is what arehe pie the different costs? most skilled labor is shaking. we don't need as much skilled labor to create products and more. what is the implication of that? everything else in the pie is more important. if the companies trying to decide where to locate their manufacturing, where to locate their plant, it becomes more important with all the other factors of production. the first of those is energy. where in a great moment in north america with energy.

energy is an important input into manufactured goods. right now we are undergoing a shale oil revolution. happening.something there is constitutional reform that has gone through the state congresses. it is looking very positive. from mexico the process of passing this is the biggest change in 75 years. this fundamentally changes the ability to have north american discussion of energy. there was a sensitivity previously, sort of like there was before nafta in the relationship, in terms of and theirarticipation ability to participate in a regional discussion. energy was off the table at the moment. .ut energy is on the table now

there's other technology that is allowing energy prices to drop in america. factors inthat many mexico can participate and that advantage in a way that brings competitiveness act to the entire american region. .he second is human capital as the need for low skilled labor shrinks, the need for high skilled labor increases. to be a will to fix these complex machines and be able to , and the realtors and design component are important. all of that is integrated into the manufacturing process. it is important for manufacturers to have folks n closingan" i communication with the people who are putting the product on the market. what do we need to do in north america to make sure that we

have the human capital to track manufacturing in the north american region and keep it here? there's a lot that each country needs to do in terms of education to do that. there are couple of things that we need to do as a region. mexico and united states initiativeunched an to look at the change between both countries. the numbers are low compared to what they should be. there is an effort they're. -- there. and needs energy. maybe this is an opportunity to bring in canada and put this in the context of reflecting back on where we were in the last 20 years and where we can go together. one of the things that we need to do is boost the level of exchange and research partnerships between universities in the country's. the list goes on and on. i encourage you to look at the paper. we will have time for more

discussion carried -- discussion. thank you. i was lucky enough to be at csis as a junior canadian asked. you can imagine what my parents up. -- thought. here i am now. it was an exciting place to be 20 years ago. it is an exciting place to be now. i will never forget it as a moment in my career because i had the opportunity to really see what makes csis great. what still makes it great is a combination of your site, vision and action. vision,

20 years ago there was a product on -- project on mexico and canada. the americasad of program and knew that we would need to understand canada and mexico to become deeper trading partners and deeper economic progress. he was interested in the economy and policy. he made sure there was the money that we could hire and expand and become the strongest program here. that was how i got to be here. when i got here shortly after i got here, again with some heavy influence from george, i had the influence on the william simon chair. a lot of you remember sydney. 30 years ago he published his

famous book, free trade with mexico? that tradehe idea with mexico could be a developed. that would it would help to change the nature of the mexico and u.s. relationship. that was a vision. he saw that after years of working in economic support in the state department. state department ran trade in those days. he really articulated persuasively so that a generation of american leaders were really thinking about what nafta could do. that made a big difference. .here was one other component i asked another person that many of you will remember. senior on the mexican project. when nafta was on the horizon, so well.omething

she created the commission. livingvened every former u.s. president, every former u.s. secretary of state, every former u.s. secretary of sdrasury, and every former u trade representative, plus the top 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. fight was, the nafta i don't think it is an exaggeration to say that it was in large measure contributed to by all of them. later, wek 20 years tried to take a look at where

this relationship could go. i am not going to repeat what my colleague said. rscore someto unde things that deserve attention. 200 this relationship changed1. the september 11 attacks brought heavy compliance cost to the supply chain across the american borders. we want to be support. it is not about abolishing security. we have defined waste to make our borders work more efficiently. second, they built the covenant on east and west infrastructure, and we need more infrastructure, road and rail. that is something that government must do. we need more pipelines, more power lines to support the

energy market that we have. there is a historic opportunity to take advantage of the labor markets. that is something the government can do by enabling businesses. we talked about that a little bit today.

>> thank you. i am going to use my time to pull for the discussion. i'd like to put one is based on an earlier comment. we make things together. it is a production block. we don't just sell things to each other. we make things together and then we sell them together in the rest of the world. what happens in north america is

that we make things together. was a heroic attempt to advance that notion of making things together. and that is part of the commercial footprint. the second point i would like to pull from that one is that as a failed in generic student i learned about statics and dynamics. one of the problems that we have in nafta is not that it was not a breakthrough. static, andules are the environment is dynamic. nafta did a good job of conforming then. but it continued to change. new opportunities were created. the change the commercial

footprint. information technology. the rise of value changed. that change the commercial footprint. america,look in north in some categories and sectors it is part of the national border. someone showed me a map of the power grid. there are grids all across the united states where they ignore the border completely. the production is deeply specialized. it be look at the u.s. north american auto industry from , you, near highway 401 cannot find the u.s. canada border. statement important

about integration. the point is not the borders do not matter. the point is that we have bigger goals. the goal is global competitiveness. the point is that economic integration moves on. it outgrows the political and institutional framework. 20 years later, there has been a lot about growing. that is what we in the private sector and in government ought to address. rules, and the constant change in the high- pressure global market, with consumer demand and innovation, roles stayed the same. it is starting to show. ago theree years subject of nafta came up. my friend made a statement. the statement included a chart.

like a mountain. it was a measure of the share of the u.s.. it started in 1994 and ended in 2011. goodsappened is that subject to preference have been 2000.ing since 1999 or there was preferential trade before nafta. mexico was a large participant in the gsp. there were half the imports from both mexico and canada, prior to nafta were subject to preference is. that is a reflection more than anything else of the decision- making that goes on in a complex , high-pressure, dynamic economy where the roles -- rules stay the same. the apparel industry is a good

example of this. the apparel industry worked very hard to get rules that made sense. of naftamarket share apparel, that is produced in the nafta was seven percent in 1994. 80% in 1999.d at 18% in 99 inning. -- 1999. in thea smaller share united states than it did before nafta. it was not a bad agreement at the time. onhink that the nafta apparel reflected the interests of all three economies at the time. what happened was that the world changed. it did not happen all at once.

it did not happen because of a policy decision. buy decision after another, one more workaround, led to that. that is the opportunity. wilson's pointis on this. countries are trying to draw on the level resources of north america to be as competitive as possible. that is the operating goal and operating policy of every company operating, large or small. whatever barriers exist are part of the transaction cost. most companies don't care whether it is a trade role, --ther it is between troy , andit and another area

the infrastructure is old as well. it can happen because of regulation. i've only been gone for a couple of years. crest is sweetened with saccharine. there is zero tariff. but there is not free trade. .here is this fundamental issue it is the nature of rules versus the dynamic nature of commerce that we need to confront. rules toneed more confront it. we have regulatory cooperation council's. councils.

i noted to some friends that senator barack obama commented on his political goal to renegotiate nafta, and it caused shockwaves in the press. the pamper civic partnership -- pan-pacific partnership is part of that. we could improve the rules of nafta. we are now lacking imagination. imagined what digital commerce would be. imagined thate mexico would open to private investment. things change. we need to reflect the change. i think that imagination needs to run both ways. the private sector needs to turn the workarounds into a policy

agenda, which we need to engage the government about. secondly, on the government side, instead of beginning with the rules, begin with the transaction. rules,u begin with the you adopt the status quo. my preference is to look at the transaction. partiesok at the two and what they want to do voluntarily, for mutual benefit. and then we ask what is the government interest in getting involved in the transaction. there are some. then the question becomes, what is the least restrictive way a government interest can be maintained and allow the transaction to happen, as they do in millions of transactions throughout america. thank you per coming. thank you to the panel. i turn it back over. >> thank you, scott.

we are running a bit long. what i would like to do, rather than have the panelist talked to each other, is to open this up for questions from the audience. we have people with microphones at the back of the room. if you raise her hand, they will come and give you a microphone. if you will identify yourself and your affiliation before you ask your question, that would be great. yes? >> thank you so much. thank you to the panel. thank you. i am with the canadian business council. if the trade deals are a possibility for fixing nafta and enhancing our trade with the world, what is the process of getting those deals concluded and in place? thank you. >> i will take one step.

the administration is committing to finishing ttip. they missed this year deadline. they will not miss next year. i think the president is extremely interested in trade promotion authority. we talked about this this morning. there is agreement at the staff the senate and house, in terms of the committee, on a potential template. the committee chairman, most of seemed totee chairman be interested in moving this forward. we will have to see. i think there will be significant activity next year. it is by election. i do not know. it is a hard vote. there will be a hard push

certainly. tpp is a longer-term proposition . it is extremely difficult. there are a number of mutual recognition agreements with europe. and i can tell you, from personal experience, it is very hard. regimes in they u.s. and europe are very dedicated to their regulations and the bureaucracies that build up around those is very substantial. each side believes it is right. i am not saying it is not possible. it is possible. but i think it is a longer-term proposition. it will be longer for the tpp. a predictionake about what the pace of negotiations will be. i wanted to say something about

the utility, the relative utility of the agreement. one of the things that was a challenge for the nafta was bringing the countries together. mexico really had to conduct a lot of reform, and really had to work very hard in order to meet the requirements in nafta. looking at the transpacific partnership, we have a lot of countries involved. they each have a different position on what they think is important. in terms of the north american nafta issues that are manageable tpp, i am more optimistic about the ttip. although you have two different elements who have different ideas about how to deal with this in a regulatory area, you

do have very similar levels of development, very similar commercial practices, and very similar interest. i think, from a canada perspective anyway, we will get more from participating with the u.s. add, butt have much to it would to bring this to the discussion of north america. you'll remember that one of the reasons why we launched on isada's free trade of nafta there was stalling. the europeans wanted to deepen their integration before widening their trade with other countries. .e turned to our own projects one of the challenges for us in pursuing the trade agreements in all directions is that if we remain uncompetitive, having failed to achieve that single market here in north america, we will have to deal with only asian companies who will export here and keep their jobs there,

and potentially put some strain on the north american economy. we do not have to change that at all. we have to think about how to carry that forward. we need to think about how to make ourselves competitive so that when we liberalize further, we will be able to take advantage of that. that is why the two discussions should be linked. we are, as people have said, separating them. >> questions, please. the gentleman right here in the third row. >> my name is jose. there has been some talk about manufacturing reshoring. does nafta have the tools to re- facilitate that? what needs to change? underwayocess is

because of changes in the global things like rising wages in china, high transportation costs, and changing currency values. the trends that have been ng, which is reshori a benefit to all the countries in the north america, have been coming from external factors. we have the opportunity to continue that trend internally i implementing things within north america. but that is something we still need to do. is there. it provides a framework that allows manufacturing throughout the three countries. but to deepen it, i mean, one of the biggest things we need to do is lower the transaction costs at the borders. that is one of the first things we talked about. that is something that has increased since nafta in a large respect. , we areastructure

trading on infrastructure from 50 years ago, when our trading rules are five times what they were before nafta. we need to change the way that our borders function, so that they are not a barrier growing over time to our joint production system. things like that would be the theto further encourage winds of the global economy. >> i would be cautious with using the word trend. a trend presumes that something will continue. tasks withcase where any supply chain have been conducted in chain -- age a -- asia. that is because labor costs have increased since 1990. and it increased transportation

costs and fuel costs. there are some dynamics, which are not permanent and can be reversed. there are some policy implications for this 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. acceptederally electronic products from any established body. ,y accepting any known standard the open themselves up to be a will to participate in assembly thats and supply chains forco will use to prevent the areas that did not have certification. there is a lot that can be done with global value change that is essential. mexico has figured the seminal program out and is implementing it. the more we do the things mentioned like infrastructure

and border thickness, order efficiency, the more we have the opportunity to capitalize on this. >> yes, you? >> i am international trade consultant. i think that the panel would agree that nafta has been a success economically. seem to have won the public-relations war on nafta. as we talk about a reset on , withmoving forward different things to reform it, what would your device be on a new public-relations a porch -- approach to emphasize the benefits to citizens in all three countries for the expanded agreement.

-- agreement? >> it is really easy to criticize nafta and really difficult to describe the nuances of international trade benefits in the same 30 seconds. states, in the united but across the region, all politics is local politics. in order to rehabilitate the nafta reputation, you have to take a look at the local level. you find the countries -- companies that have been able to trade and come back from downturns to benefit from ,reater regional opportunities we take it to the untold stories of regional prosperity. the trouble with the canada and u.s. relationship, and also the great benefit of the canada u.s. benefit, is that nobody thinks that is foreign.

[laughter] i think it is locally focused stories and also engagement with the global 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. but there is a level of truth to it. what we are doing now is competing on a global stage. in order to compete on a global stage, we need to work with our partners. our partners in production are canada and mexico. we need to work with them to win that fight. ,> this is not maybe good pr but it may be a store we have not told enough. want like a trade agreement

that benefit a handful of companies and excluded other people, including people who wanted to trade a used car cross-border. but this was better trade for everybody. in nafta 2.0ink about how to keep the focus on having as many winners as possible. that will be a great thing. h, people worry at first, maybe a mexican person will take my job. but you have to no caps on a couldgo to toronto, or it go to mexico and take advantage of opportunities. we have the best universities in the world here in the u.s.. i do not teach it all of them. [laughter] we should really be proud of them.

that is why i think we should do full recognition on regulatory standards. we should say that we have full mutual recognition and negotiate that. not to sound too libertarian am a but i think we should do what europe does. at the federal level, in all three countries, will we should do is focus government on setting the standards and let the private sector, and the engineering companies set up to do compliance verification. we could test once by one company that response to public standards and presents those findings back to the government. in the process, the sector can capitalize much more quickly than the government can. but there will be jobs. and that will be chairman us for our economy. europe does that. we can do that. isng part of growth america a win for you as an individual, and i think that will help.

question. tough argument withe ross perot on larry king. larry king is no longer in the air. is still a place for discontent for all of the trade opponents in north america. better job ofa helping people understand how we interact. that point rang true about people don't think of canadians as foreigners. i remember being at a chamber of guest,e meeting as a somewhere in flyover country, and said, by a show of hands, comedy is international operations? no one refinance. and then i said how many be subbing for canada? you sell things to canada?

then more hands went up. small businesses have the lowest trading costs ever. if you are reaching customers or consumers on ebay, and if you are handling financial andsactions through paypal, you are freight ford or is a company called fedex or ups, you have a low-cost way to reach a foreign-based than ever in history. that is important. it is happening now. those of us who believe this stuff need to do a better job with this. >> questions? yes. morning. i represent the canadian province of manitoba.

i find this all hopeful and optimistic, but i am wondering how do you plan on getting uy in so thereb is not further undermining of successes that we have had? there've been examples of this with country organ labeling. we were making something together. we were making pork chops together. but then the labeling and the impact on livestock trade has decimated that. efforts in congress to introduce clean energy standards, none of them have passed, but scott mentioned earlier the north, south flow of the electric grid. despite the existence of that grid, the existence of the electricity trade, the proposals

for grenoble clean energy standards all would have differentiated between imported and domestic electricity. hope, iere is a lot of am wondering how you propose to tackle that area? >> i will channel alexander hamilton. i think to the extent that the president and his administration and activetious focus, congress has less time for mischief. i think that right now if the president pushes hard for the , we willip and ttip worry less about greeting cards or cattle from canada.

italy's cu specint and finds a robust audience. creeps back in and find the robust audience. >> having the nafta does not mean there are not interest groups with political clout, money, and determination on the issue. that is politics. that is the nature of the beast. it will always be there. with respect to our major trading partners, an individual european trading companies companies -- we could go around the world. i take a practical approach. get in the fight as effectively as you can, but these issues

that you indicate are not going to go away. they will not be resolved by agreement. if they are resolved by resolution one the change. you have to let steam come out of it. you have to let people have their say. a number of these issues have been around a long time pre- nafta, and i think they will be around in the future. this is a practical matter. administration needs to take a tougher line. why? we need to look before we put it on the plate of any administration. not just democrat but republican. aboute to be realistic

what can be achieved and do your best to defend your interests and get in the fight. i do not think the issue is going away because of the nafta or because we would like to see it renewed further. >> it is always good to mention the greats. ardo, heo back to ric doesn't talk about trade. he talks about intercourse between a nations. if we could talk about intercourse between nations that could work. [laughter] that could be big. -- alia back slightly , canadait back slightly is one of the largest exporters of animal genetics in the world. rules, somessue of

of the things that the representative from manitoba mentioned are things that are framework.ules-based i am not sure that labeling could be dealt with in the nafta . issue, and anthe issue that canada had with curcumin. meant -- percurment. sometimes you of the dustup and get in there. sometimes you can contain some of these problems within an agreement. static.e but the environment is dynamic.

thelma? i've been waiting for you. if we go back to your comment about the former senator saying he went back to renegotiate the nafta. . don't think that was positive i don't think he wanted to renegotiate by addressing the tp p. see that labor issue in a positive way? we fought tooth and nail to see that that did not get expended too much. i don't believe we are going to get organized labor to work.

highlightu can just how we are moving on the labor and if it can be incorporated in a positive way into trade agreements. i want to make one brief comment about rules being static. should beles negotiated in a dynamic way so rules on congress does labeling we can, like we have in ,he past and will in the future say that is a violation of the rule because the rule is a liberalizing role -- rule. if you have to strict labor requirements you have violated the rule. chris might have

something to say on the labor related issues, given coproduction and so on. and scott you might have quite a bit to say about labor. >> let me make a brief comment about the provisions in the trade agreements. we have come a long way in trade agreements with labor and the environment.-- we do a better job of making sure the agreements themselves are robust and offer the it degree of protection. will we've not done his gain support. the remain positive about ttip.

they are not beyond support. if you make things together, you make things in a way that enhances opportunities for labor. this macrothat change plays into this. there is the importance of inputs in production and imported inputs. to the extent that companies and industries depend on imported inputs that are competitive, you are generating trade. that is the macro dynamic playing out. in the long-term, that opens the opportunity for change in the discussion. that is something that is happening very, very slowly. point.nt to make a quick labor unions can also be dynamic. ande was a labor shortage,

we have been recruiting workers from the united states. it has been relatively easy to coming to canada on a temporary basis if there is a labor shortage. then there is the demonstration of skilled trade. unionis the counterpoint on both sides of the border that has said, we would rather that use union members from canada rather than nonunion members from other countries. certify doubto that work faster in alberta. >> all they would say is that you can see from the rhetoric over the immigration debate in the congress, including the use of high skilled labor how difficult these labors -- issues are.

to the extent that the view means movement of low skilled labor across the borders, the concern, including from big labor, the comes even greater. i do think that that was an important point. given the nature of the global economy today, given the nature of competitive strain in the united states, as well as in north america, given the rise of the asian economy, which are fiercely competitive. we do have greater room for discussion than we did previously when this was not so apparent. competition is different now from when we first

negotiated. at the time, politicians did not see the need for the movement of labor. the situation is different today. environmenteconomic will leave space for people to talk much more rationally about at need to move labor and its best use. that is the need for co-joint reduction changed, for reasonable. it would be an acute need in the case of joint r&d. there is more room today for debateion, but from the hill andalth -- congress, it remains difficult politically.

>> with that, let me add my thanks to the ambassador. thank you for attending this morning. [applause] >> in a few moments the press club speech by chairman and ceo dan akerson. i wish you a happy christmas and a bright and prosperous new year. >> we're delighted to have you, santa claus, and have you open the sales that began on thanksgiving.