Authors: Shafak Sajid and Carlo Dade
The paper proposes a tool for growing and protecting good jobs in North America.
For many state and regional economies, Canada is the largest trading partner: 1.7 million jobs in the U.S. are directly tied to trade with Canada and 2.5 million jobs in Canada are directly tied to trade with the U.S.i Protecting and growing the jobs tied to this trade is of obvious importance. Equally important and often overlooked, the movement of goods and services across borders in North America is tied directly to producing things together in North America that are sold – at home and abroad – in direct competition with goods produced by other trade blocs.
An efficient movement of goods across borders is critical to growing and protecting jobs that are tied to trading with each other, and jobs that are tied to the North American integrated supply and production chains. Unnecessary inefficiencies in the movement of goods across North America’s borders add costs, suppress productivity and wages, limit global competitiveness and threaten jobs.
This paper argues that a North American Border Infrastructure Bank (NABIB), focused on providing financing and, more importantly, information, would improve the trade competitiveness and protect jobs in North America.
The U.S. and Canada fund and help run development banks in other parts of the world that provide intelligence and funding services to other trade blocs; making those blocs more competitive. This paper proposes that Canada and the U.S. make that same investment in improving infrastructure to protect jobs in North America.
The United States and Mexico already have a binational bank, the North American Development Bank (NADB), dedicated to improving community and environmental infrastructure along that border. The NADB has recently made small forays into more transportation-related infrastructure projects. But there is a clear need for an institution focused exclusively on improving trade infrastructure tied to moving goods through North America’s integrated supply and production chains. Ideally, such an entity would be trilateral as this would provide the greatest benefit and return on investment. However, if necessary as a second best option, significant benefits could still be realized by following the NADB model and creating a binational institution focused on the northern border as an interim step to creating a trilateral North American entity.
The paper makes the claims that:
01 Planning, financing, building, maintaining and operating border infrastructure has become increasingly difficult primarily, but not exclusively, for political reasons, and will be even more difficult in the near future.
02 Other trade blocs, which also have integrated supply and production chains, have institutions and resources not present in North America. These mechanisms mitigate and manage political tensions and facilitate planning, financing and building cross-border infrastructure to produce goods jointly. They also provide knowledge of integrated supply and production chains. In North America, we talk about integrated supply and production chains – but we don’t have the data.
03 The challenges that hinder the planning, financing and building of border infrastructure, and directly threaten North American jobs, can be resolved by the creation of a third-party, independent infrastructure bank – a North American Border Infrastructure Bank (NABIB). The institution would be jointly capitalized, staffed and governed by the member governments.
A NABIB would be a North American institution with a limited mandate, set out below. It would not have a broad development mandate and would not fulfill all, or even most, of the functions of traditional development or infrastructure banks such as the Inter-American Development Bank or the Asian and European Infrastructure Banks. It would have a narrow focus and solve specific issues.
This paper views infrastructure broadly to include not just physical infrastructure such as roads and bridges, but also facilities and operations of those facilities for security and immigration, as well as, potentially, energy- and cyber-related infrastructure and security.
A NABIB would:
i. Focus narrowly and solely on providing solutions to the specific physical, financial, security and information challenges tied directly to the movement of factors of production across borders in North America.
ii. Finance border infrastructure, excepting sea ports, in North American corridors and gateways such as bridges and customs plazas
iii. Proactively collect and disseminate data and analysis on the movement of factors of production tied to the integrated supply and production chains in North America and the infrastructure associated with this.
iv. Provide advice and assistance, including co-ordination, to all levels of government on design, building, regulation, management of border infrastructure and security protocols to improve the quality of decision making and return on infrastructure investment.
A fifth implicit outcome from creation of a NABIB would be to engage the participating NAFTA partners in a permanent, jointly staffed and administered institution focused on the foundational element of North American trade – the movement of factors of production across integrated North American supply chains. In the present political climate, this may be the most important contribution.
These assumptions were tested through debate at a series of working group meetings organized by the George W. Bush Institute and the Canada West Foundation. The goal was to provide a framework to help governments decide whether a NABIB is warranted and, if so, negotiate the terms for creating such an entity. Details not addressed in the paper are ones that require political compromise and negotiation.