Canadian Options in North America

The Role of Sub-National Governments in North American Integration

Earl H. Fry, with commentary by Gerald Boychuk March 18, 2004

In this paper, Earl Fry establishes the prima facie importance of North American border provinces and states to each other and more generally to the economy of the three NAFTA countries. Many of these subfederal governments have political and economic bases that are larger than those of most nation-states. Dr. Fry provides a wealth of evidence that US states and Canadian provinces are increasingly proactive in the management of commercial relationships across international borders.

Indeed, Canadian provinces and US states are now involved in a number of regional commissions and groups that transcend national borders. As well, there are many ad hoc exchanges between state governors and provincial premiers. These forums allow them to deal with issues of common interest, including, as Dr. Fry documents, providing support for federal policies that may foster regional interests, or taking a stand against federal policies that may hurt some states and provinces with common interests. Some of these forums also produce sophisticated studies of regional issues.

In fact, says Dr. Fry, the interests of states, provinces and even municipal governments may at times lie more in supporting the regional economy than in an alignment with a far-away jurisdiction in the same country. Conversely, he says, some of the most heated cross-border frictions can occur within regions, particularly those on both sides of a border that have a similar resource base.

Dr. Fry’s analysis is that states and provinces are reacting to the impact of globalization and of the attendant mobility of products, people and capital on their jurisdictions. They are “thinking globally and acting locally” in response to what are sometimes perceived as the constraining effects of agreements signed by senior levels of government. They are also reacting, says Dr. Fry, to the inadequacy of the consultation the federal capitals have undertaken with subfederal governments on continental integration, although in his view the Canadian government has the best track record in this respect.

Mexican states have been the least involved in these cross-border relationships, but this is beginning to change with the somewhat less centralizing political environment there. Another spur to cross-border initiatives at the local level along the Mexican-US border is the record number of Mexican-born residents in the United States, a fact that has regional causes – and consequences – notes Dr. Fry.

In that context, the author suggests several steps pertaining to states and provinces that could enhance the prospects for further economic integration in North America. Among these, both the federal and subfederal levels of government need to better research and understand the impact of globalization on governance within their federal systems, because it is becoming increasingly difficult to differentiate between “domestic” and “international” policy. National and subnational governments should also take stock of their major interdependencies and the existing cross-border mechanisms and agreements that pertain to them. One possible outcome would be more regular state and provincial involvement in the management of sectors with important cross-border dimensions, such as energy.

Another step advocated by Dr. Fry is the establishment of effective and regularized consultation between the national and subnational governments on issues that have both international and domestic dimensions. In another recommendation, Dr. Fry advises states and provinces to draw a clear line between “foreign affairs,” which are naturally a part of their responsibilities, and “foreign policy,” such as commercial sanctions. The latter could create contradictions within nations and exacerbate rather than facilitate the intergovernmental co-operation needed to meet the challenges of North American integration.

This folio includes comments on Dr. Fry’s paper by Gerard Boychuk. He notes that Dr. Fry’s recommendations need to be examined in light of a number of important dynamics on the ground, such as the varying ability and willingness of subfederal governments within each country to either facilitate or frustrate integration. We should ask questions such as why the various levels of government in the US have not pursued the rather self-evident solution of greater intergovernmental consultation. We should also ask, says Dr. Boychuk, whether this solution would really be in Canada’s interests, as opposed to other avenues such as deeper direct engagement with the US states themselves.

Thinking North America is based on presentations made at the biennial “Art of the State” conference held in Montebello in October 2003. It provides a comprehensive examination of the multifaceted challenges and opportunities presented by North American Integration.

More generous cash-transfer benefit would improve access to essentials, says IRPP report
More generous cash-transfer benefit would improve access to essentials, says IRPP report