February 9, 2010

Carrick: Common currency, borderless crossings should come next

I have written on several occasions about the desirability of a joint U.S.-Canadian dollar, a security perimeter around both countries and unrestricted border crossings.

The resulting productivity and cost-saving gains for both countries from the free flow of goods plus business and tourist travel would be enormous.

I’ve been told that this will never happen. My answer is that change is a funny thing. The nature of change can be surprising.

Things don’t change until they do change. The collapse of the Berlin Wall, the end of the Soviet empire and the election of a man of colour in the U.S. were almost inconceivable until they actually did happen.

The just-negotiated exemption of Canada from U.S. Buy American provisions is a case in point.

By allowing companies on both sides of the border to bid on government jobs in the corresponding foreign jurisdictions, this is a further move toward integration of the two economies.

It came about because negotiators were determined to make it happen. As an interesting and eminently worthwhile side-benefit, it will remove many of the interprovincial barriers to trade within Canada as well. This has been a goal sought by many for decades.

The next step may well be a common currency and borderless crossings. Naysayers will argue that we have too many cultural differences. How seriously is this to be taken? After all, the Euro and limitless travel have been achieved in Europe, a geographic region where two horrific wars were fought in the last century.

In a world in which emerging nations are re-ordering economic rankings and national balance sheets, the two countries need each other as much as ever, if not more.

The U.S. and Canada have a commonality of purpose to achieve and maintain energy self-sufficiency, good balance in fiscal management and environmentally sensitive caretaking of our resources.

All of these are more likely to be achieved by a closer alignment of our policies, laws and economic priorities.

-Alex Carrick (CanaData chief economist)

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