Mexico and the World
Vol. 2, No 4 (Fall 1997)
http://www.profmex.org/mexicoandtheworld/volume2/4fall97/chap2.html

Cascadia: Shared Visions and Strategic Alliances in a Cross-Border Region

Table of Contents

INTRODUCTION

THE FOUNDATIONS OF CASCADIA

Regional Definitions and Organizations

Regional Characteristics

JOINT VENTURE: ECONOMIC DEVELOPMENT AND INTERNATIONAL TRADE

The Economic Base

Intraregional and International Trade

Present Cultural Industries: An Example

1995 Regional Economic Conditions by Province and State

British Columbia , Alberta ,Washington State ,Oregon Montana, Idaho, Alaska

Economic Integration with International Trade

DEEPENING FREE TRADE IN THE PACIFIC NORTHWEST ECONOMIC REGION

Constitutional Basis of State and Provincial Trade Barriers

The North American Free Trade Agreement (NAFTA)

The Canadian Agreement on Internal Trade (CAIT)

PNWER as an agent of trade liberalization in Cascadia: prospects for the future

CONCLUSION  

ACKNOWLEDGMENTS

REFERENCES

LIST OF FIGURES

1.1 BC Exports to Washington State

1.2 A Cascadia Portrait

1.3 Pacific Northwest States FDI to British Columbia

1.4 Regional Trade Flows in the Pacific Northwest 1994

Introduction

In recent years the notion of closer cooperation within the Cascadia region has become increasingly popular. The region, which includes the US Pacific Northwest and part of Western Canada, is divided politically but united geographically and is rooted in the old Oregon Territory which was severed by the fixing of the 49th parallel as the international boundary by the Treaty of Washington in 1846. As is often the case with political frontiers (East and Prescott 1975), the settlement on a boundary did not define allegiance: British Columbia - the Canadian remnant of the Oregon Territory - remained tied economically and culturally to the rest of what was then a San Francisco-focused region. Establishing 'Canadianness' in British Columbia became one of the great challenges of Confederation after 1871 (Howay, Sage and Angus 1942).

This continuing conflict between geographical and political forces has shaped the history, landscape and attitudes of what until the 1960s was very much a frontier region (Ormsby 1958, Gibson 1974, Sanford 1978). The Canadian and American components of the region grew increasingly apart over the first half of the century as a result of the centralizing and standardizing tendencies of separate nation building. Yet, significant economic and cultural connections remained. Since the 1980s there has been increasing awareness of the potential for reviving the historic regional alliance as a response to the restructuring of the global economy. Local business, academic, community and political leaders have begun to see that while Washington State, Oregon or British Columbia are individually relatively small markets within their respective countries, when taken together the broader regional market of Cascadia is one of the largest in North America.  

In this chapter the development of the Cascadia concept is reviewed from its origins in a common geography, economy and culture to its status today as a recognized regional entity as the result of various policy, governmental and business initiatives. We begin with an overview of the region from the 1950s, with a focus on those aspects of commonality upon which a wider vision has been built through regional cooperative ventures. In the second section, the current regional economic outlook for Cascadia is examined, with a focus on intraregional and international trade. We conclude with an evaluation of the role of NAFTA and Non Governmental Organizations (NGOs) in fostering trade liberalization.

The Foundations of Cascadia

Regional Definitions and Organizations

Several geographic areas have been described as "Cascadia." The largest is comprised of British Columbia, Alberta, the Yukon, Washington, Oregon, Idaho, Montana and Alaska. This regionalization is loosely, but formally, organized as the Pacific Northwest Economic Region or PNWER, a governmental vehicle for regional economic cooperation. A more historically correct (Freeman and Martin 1942, Scott 1980) and common definition is the one utilized by the Cascadia Trade and Transportation Task Force, based in Seattle, and the Cascadia Institute based in Vancouver, which is limited to Washington, Oregon and British Columbia.

The Task Force represents a coalition of all levels of government and non-governmental organizations in the three jurisdictions. Its purpose is to develop cross border strategies that focus on growth management, cross-border mobility, and improved regional trade and tourism linkages. There is also a more thematically focused group - the Pacific Corridor Enterprise Council (PACE), a private networking organization formed to encourage closer business, trade, and tourism links throughout the region that has chapters in Oregon, Washington, British Columbia and Alaska.  

Other initiatives and organizations recognize elements of the more urbanized parts of the region. The Georgia Basin Initiative - a program of the province of British Columbia - includes those portions of BC and Washington surrounding Puget Sound and the Georgia Basin. This inland sea stretches from Olympia, Washington in the south to Campbell River and Powell River, BC in the north. In the past year a fifth configuration has emerged called "Cascadia's Main Street" encompassing the major urban and subsidiary centers located on or near Interstate 5 from Eugene, Oregon to those along Highway 99 in Canada to Whistler, and the Island Highway on Vancouver Island from Victoria to Campbell River (Artibise 1994, Artibise 1995). 

Regardless of the definition of "Cascadia," the region offers a spectacular array of natural and built environments, with wilderness coexisting in relative harmony with sophisticated urban centers. The defining physical characteristic of the area is its mountainous nature (Robinson 1989).

While geography has created many boundaries, and the international border divides two national identities, the citizens of the region have much in common. The major urban centers of Seattle, Portland and Vancouver were identified in The Association of American Geographers Comparative Metropolitan Analysis Project as being the most similar to each other in terms of size, economic function and social conditions (Andrus, Beyers et al. 1976, 7). Moreover, these cities are all characterized by mild temperatures, abundant precipitation, and a generally overcast and drab climatic regime (McKnight 1992). Notwithstanding the rain, migration from other parts of North America and overseas is contributing to rapid urban growth (Artibise, Moudon, and Seltzer 1996). Cascadia is increasingly attracting attention for the quality of life and relative prosperity it offers.  

Regional Characteristics

The persistence of geographic, social and economic ties in the region has led Garreau (1981) to develop a unified conception of the area as part of 'Ecotopia' in his popular regionalization of North America. The environmentally-sensitive emphasis of Garreau's term (and of McCloskey's original 'ecocultural' description of the "Cascadia" region (Quigley 1990)) is in sharp contrast to formulations used before 'quality-of life' became a favored symbolic feature of the region in the popular press. Until very recent times the principal characteristic of the region had been its frontier nature, driven by boom and bust resource exploitation; even the political life of the region was inseparable from this condition (Robin 1973, Schwantes 1989). While the cities of Seattle, Vancouver and Portland were rapidly attaining metropolitan status in the post-war era (Andrus, Beyers et al. 1976, Hardwick 1974, Abbott 1983, Artibise, Moudon, and Seltzer 1996) the marks of their more utilitarian origins remained and they 'retained a frontier roughness' (Roy 1980, 159).

These principal cities are seaports which until recently have been geared to the export of raw materials. The waterfront districts, known as Skid Roads, were the original centers of lumbering operations; serving as rough and tumble entertainment centers for transient maritime, hinterland and local resource industry workers (Gill 1972). Prostitution and illegal drugs have historically been significant problems, with traditional crimes like liquor violations and gambling only declining in significance since the late 1960's with regulatory liberalization.  

The sense of isolation produced by the mountain barrier, as well as the embryonic and remote nature of the region, were important defining characteristics in the 1950's before improvements in continental air transport and telecommunications systems. Even between cities such as Vancouver and Seattle - more closely connected to each other by highway and scheduled maritime service than to cities in their own countries - travel by land was not convenient until the completion of a freeway connection (Interstate 5/Highway 99) in 1962 (Evenden 1978).

Modernization in regional transportation continues, fueled by political leadership that recognizes the integrative potential of the region. The last link of the old maritime network was severed in 1990 with the sale of the ex-Canadian Pacific Railway turbine steamer Princess Marguerite, which had maintained a Victoria-Seattle summer service. While the passing of this representative of 19th century technology was mourned by many, the Mayors of Seattle, Portland and Vancouver offered a vision of the 21st century in advocating the development of a high-speed rail connection between the cities. Mayor Norm Rice of Seattle told a conference that, 'We need to see our cities as the driving engines of a super region stretching from southern Oregon to Alaska, from Montana and Alberta to the Pacific' (Hogben 1990, F7). 

While the region is sparsely populated in an overall sense, by the 1950s the vast majority of the population was composed of urban dwellers from varied ethnic backgrounds, predominantly Caucasian, but with significant Asian minorities. In addition, both Vancouver and Seattle shared a common history of settlement by the other's nationals (Andrus, Beyers et al. 1976, Roy 1980). The notable population differences between Vancouver, Seattle and Portland have been the much larger British Isles-born population in Vancouver and the post-war growth of the African-American population in the US cities from one percent or less of the population to over ten percent in Seattle and just less than eight percent in Portland by 1990. Swollen by the post-war baby boom, by 1960 the majority of the population in the two cities had been born in the region, a factor which, when combined with a tradition of geographic isolation, contributed to a heightened sense of insularity (Macdonald 1980). This insularity has been somewhat diluted with improved communication links and increases in immigration. The population of the City of Vancouver is now 27% Asian, with Portland (5.3%) and Seattle (11.8%) also having significant, if smaller, communities (Artibise, Moudon and Seltzer 1996).

These commonalties and the activities of the new regional organizations, such as PNWER, have all played a role in fostering Cascadia as a greater region. The bio-region is an extraordinarily attractive area, and its natural beauty and strategic global location have made it one of the fastest growing urban regions on the continent. Indeed, the region is rapidly emerging into a single megacity with consequent pressures on a common land, air and marine environment bisected by an international boundary. Given the dramatic growth pressures on the bio-region, special cooperative efforts are needed to preserve quality of life, including opportunities for employment, housing and recreation. Livable places do not just happen, they are created by the people who live there (Artibise 1994). One of the critical factors in nurturing and enabling the creation of such an environment is the strength of the regional economy. 

Joint Venture: Economic Development and International Trade 

The Economic Base 

With a significant part of Cascadia comprised of the great coastal rain forest, the economic and cultural base of the Cascadia region has been centered on the harvesting and processing of natural, particularly forest, resources. The form of industrial relations and settlement patterns, as well as the character of everyday life, have been tied historically to the economic fluctuations of this export-driven industry (Warf 1988a, Grass and Hayter 1989). Because of the frontier nature of the region, and an industrial base that produced social isolation of workers in camps and company towns, British Columbia and the US Pacific Northwest have been the most highly unionized and strike prone regions in their countries (Jamieson 1980). In the post-war period, while there was notable progress away from the traditional staples economy, the region remained primarily focused on resource exploitation into the 1960's (McCann 1978, North 1975, Denike and Leigh 1972, Bradbury 1982). While Boeing of Seattle can be considered an exception to this generalization, the firm's technological linkages outside the region have reduced its impact on the economic base in comparison with the historic sources of economic growth (Erickson 1978). In more recent times, as a result both of the maturing of the regional economies and environmental pressures that forced major changes in resource exploitation, there has been a new emphasis on high technology. The evolving economic base is characterized by firms such as Microsoft in Seattle, cultural industries related to music, film and television in Vancouver, as well as tourism throughout the region.

This 'new' economy of Cascadia is highly export oriented with a focus on the Pacific Rim and includes the traditional resource-based industries, value-added industries, aerospace, manufacturing, defense, transportation, energy, tourism, computer software, entertainment, environmental industries, and biotechnology. Throughout the region there is a complex network of trade relationships and associations, some long-standing in sectors such as energy and the forestry. Other more recent networks in the technology and service sectors are evolving (Artibise 1995).

Intraregional and International Trade

Intraregional and international trade is significant and growing, with high levels of cross-border commuting, shopping, and movement of goods and services. Trade within the provinces and states is a very important contribution to the economic prosperity of the region. The predominant commodities traded within the region are newsprint, natural gas, lumber, seafood, and agricultural products (Figure 1.1). The region is the third largest computer software development center in North America and an expanding center for environmental and biotechnology industries. Tourism is one of the largest sectors of the regional economy, ranking second in British Columbia and fourth in Washington (Artibise 1994). Taking but one example, in 1995 the Port of Vancouver served 596,724 revenue passengers, primarily from the US, as the principal port of the Alaska cruise industry. 

Source: Dufour 1996

Through the government-industry association partnerships previously mentioned the region is being promoted internationally as a growing technology center. Since 1991 the industry associations in the region have been holding joint meetings, sharing information, and raising their profile. The regional thrust has attracted the attention of analysts and policy makers outside the region and has given the industry advantages in targeting investment from major North American financial centers. The Vancouver

Stock Exchange is increasingly an important source of venture capital to industry (Artibise 1988).

Although the traditional large employers in the resource, defense and aerospace sectors will remain in a dominant position within the regional economy, value-added manufacturing, and knowledge-based, high technology, small and midsize companies are providing much of the recent growth.

Unlike the highly integrated regional economies of the Great Lakes region, built on the automotive and manufacturing sectors, the Pacific Northwest and British Columbia have traditionally been competitors. The ports, airports, and railways serving the region compete fiercely as gateways for international traffic to North America. With parallel resource bases, many of the region’s products are similar and competitive in sectors such as forests products, agri-food, wines, and seafood. All these strong competitive factors result in relatively high GDP per capita for the Pacific Northwest region compared to the United States as a whole. Because of the location of Canada's manufacturing core in the greater Toronto area, Canada’s per capita GDP is slightly higher than Cascadia's. Within Canada, British Columbia and Alberta have relatively high per capita GDP compared to the country as a whole and Cascadia (Figure 1.2).

Another key influence on the region’s economy is the “information age.” More and more economic interactions are centered around the transfer of information from one point to another, or the application of new information in the form of improved product designs, more effective promotional campaigns, and more efficient capital markets. One of the consequences of the information age has been that non-industrial sectors of the economy have expanded more than industrial sectors. National employment in goods-producing industries has been stable at best, and has declined in many regions and industries. At the same time, many service industries, and the regions hosting these sectors, have grown rapidly. But even though industrial sectors of the economy are not in a state of rapid expansion, they still represent the foundation for the Pacific Northwest economy (Artibise 1994).

Present Cultural Industries: An Example  

One of the non-industrial sectors that has shown tremendous growth throughout the region has centered on the creation and production of popular music. In the 1950s and 60s a common youth culture formed in the region around a regional rock and roll variant known as the Northwest Sound. Originating in the Seattle/Tacoma area, this regional sound was symbolized by the song ‘Louie Louie’ (Gill 1993). The song became so emblematic of the region that it was twice nominated as the official Washington State song, with attempts to have it enshrined in Oregon and Idaho, as well (The Seattle Times 1989, Collins 1985). The local music phenomenon that was the Northwest Sound - forged out of the baby boom and the accelerated development of contemporary west coast society - mirrored the externality, physical and social ruggedness, and the peripheral character and ‘newness’ of the region, and helped mark the transition of the rapidly urbanizing areas of Cascadia from frontier to metropolis.

This common regional experience of the Northwest Sound prepared the ground for the development of a significant international musical industry in the 1980s. Vancouver has become a major international recording, entertainment management and music production center. Vancouver-based producer, Bruce Fairbairn, has been responsible for recordings which have sold 60 million units worldwide over the past fifteen years (Keyes 1996). Artists such as Bryan Adams, k.d. lang and Colin James continue to enjoy chart success. Moreover, Seattle has emerged as the center of an innovative local ‘grunge’ music scene typified by bands such as Queensryche, Nirvana and Pearl Jam which play a ‘cussed, aggressive, incisively individualistic style...with it’s own attitude’ (Cocks 1992). Whether the late Kurt Cobain’s anthem ‘Smells Like Teen Spirit’ will be the ‘Louie Louie’ of the 1990s, remains to be seen. The relation between the music, culture, economy and geography of the region was summed up in the 1990s by Guns n’ Roses bass player Duff McKagan, a Seattle native, who noted, ’You gotta understand Seattle, it’s grunge. People are into rock & roll and into noise, and they’re building airplanes all the time and there’s a lot of noise, and there’s rain and musty garages. Musty garages create a certain noise’ (Azerrad 1992, 44). This noise has proven to be an important regional economic stimulus and export. 

1995 Regional Economic Conditions by Province and State

 While there are common bases of the regional economy in both the established and developing sectors, the challenge of a more integrated region is for traditional competitors to move beyond sectoral competition and encourage greater economies of scale in production and marketing. As a basis for our later discussion of the legal and political initiatives for trade liberalization and greater regional economic integration, we turn to a brief examination of the current economic conditions by province and state. 

BRITISH COLUMBIA 

Trade expansion in British Columbia has led to an increase in housing starts, gains in commodity prices, rising personal incomes and more retail sales. A prime example of stronger trade links is the value of British Columbia lumber exports to the United States which increased by 41 percent in 1993. The importance of the lumber industry in British Columbia cannot be overstated. B.C. lumber exports represent 34.5% of the province’s commodity exports and 59 percent of all U.S. softwood lumber imports. Other commodity prices have increased because of stronger trade links, particularly copper, aluminum, natural gas, pulp, and newsprint. This reflects strength in the US economy and rapid growth in Asia. The price gains have prompted the reopening of some mines and increased drilling of natural gas. Strengthening in commodity markets helped boost corporate profits by 22.7 percent during 1993 (Northwest Policy Center 1995). Money managers regard Vancouver as a world leader in mining, with more exploration geologists based in the city than anywhere else (Prosalendis 1996).

In addition to its presence in the music industry, B.C. has become a major center of film and television production. In 1978, the film industry produced $8.5 million (US) worth of business in B.C. By 1995 this had grown to over $300 million (US) in direct spending on 35 feature films, 42 movies of the weeks, and 18 TV series. Most productions, such as the films Jumanji and Ace Ventura II and TV series The X-Files and The Commish, were for the US market (British Columbia Film Commission 1996). 

ALBERTA

Alberta's economy, measured by GDP, is in continuous expansion. The exploitation of oil and the farming of wheat provide a strong economy that contributes strong productivity to Cascadia. After several years of painful restructuring, the province’s key energy sector is doing quite well. While not entirely complete, the sectional restructuring and shedding of employees has slowed considerably. Oil and gas wells drilled so far have been just shy of 1994's rapid pace. The drill forecast is an amazing 10,500, more than twice as many as in 1992. Natural gas exports to the United States have swelled with the completion of pipeline projects and a weakening Canadian dollar. Gas production and exports are expected to spark employment and income growth in the near future.

Alberta farmers recently had another good year in 1995. September was the highest recorded month for bumper crops. Both of the province’s main cash crops, wheat and canola, have enjoyed strong and stable prices. At the end of 1995, the United States lifted its import cap on Canadian wheat of 2 million tons, which it was obliged to do under the rules of the World Trade Organization. Given the importance of the U.S. as an export market, this is an excellent new development for Western Canadian farmers that will provide expansion for the Alberta wheat economy (Northwest Policy Center 1996).

WASHINGTON STATE

High-tech or knowledge-based industries play a dominant role in the Washington State economy. Large companies like Boeing, Microsoft, Hanford, SEH America and Matsushita employ a substantial number of residents in Washington State. Other industries like forestry and agriculture also play key roles in the Washington State economy. 

Capital investment from Washington state to British Columbia has recently skyrocketed (Figure 1.3). Large corporations from the United States are expanding by investing in plants, property and equipment in British Columbia. Exports of manufactured goods to Canada have recently increased. Recent developments like Windows 95 (by Microsoft) and the development of the new Boeing 777 have increased the Canadian demand for these products which in turn have increased exports to Canada for these goods. The Washington State economy is considered the strongest of the Pacific Northwest region and will continue to grow, along with the economic development of Cascadia.

Source: Pickles 1995 

OREGON 

The Oregon economy is primarily focused on lumber and wood products, agriculture, tourism, high-tech industries and mining. Recently Oregon has experienced a series of high-tech announcements representing potential investment in excess of $8 billion. The list includes LSI Logic, Fujitsu, Hyundai, Siltec, and Komatsu Electronic Metals. These high tech expansions and new plants will be a reservoir of strength for the state during the companies’ construction and opening phases. Expansions in Oregon have resulted from the world wide computer chip boom, the state’s water availability, low cost power, educated workforce and tax breaks under Oregon’s Strategic Investments Program (Northwest Policy Center 1996).

Oregon’s leading exporters are in the industries of forestry, agriculture and production crops, industrial/commercial machinery, and computer equipment. Oregon’s main trading partners are Japan, Canada and South Korea. Because of Oregon’s coastal location, transportation waterways are a dominant transportation path that provide easy access for trade movement to these countries.

MONTANA, IDAHO, ALASKA 

Montana is the weakest economy of the Cascadia Region but has been experiencing recent economic growth with increases in the farming and construction sectors. The ever increasing popularity of tourist destinations like Whitefish Ski Resort at Big Mountain provide economic strength to the area.

Idaho’s economy is improving rapidly. Idaho’s long surge in economic activity, which began in the late 1980s and carried the state through the 1990-1991 recession unscathed, put Idaho as the fourth fastest Gross State Product (GSP) growth rate in the United States behind Nevada, Utah, and Arizona. Expansion in construction, technology, forest products and government account for the recent economic boom. The recent construction boom led to an increase in demand for British Columbia lumber.

Idaho and Montana’s interior location places them far from key transportation corridors (seaports, airports), which are gateways for international trade. This has resulted in poor economic productivity compared to the rest of Cascadia. These two states also lack the natural and technological resources that are needed for stronger productivity. 

Alaska’s economy is dominated by tourism and a few large firms such as Trident Seafoods, ARCO, Carr Gottstein Foods, Fred Meyer and National Bank of Alaska. Alaska is a relatively small but stable economy that also depends on international trade for its prosperity. Government programs like the Agricultural Revolving Loan Fund (ARLF) and the Alaska Science and Technology Foundation help the high-tech and agricultural sectors of the economy (Fry, Binks and Smith 1992). Because of Alaska’s small population base, it has the highest GDP per capita in the whole Cascadia region.

Economic Integration With International Trade

International trade (Figure 1.4) and foreign direct investment are dominant sources of economic activity in the region. The importance of international trade in the Cascadia region cannot be overstated. With the passage of the Free Trade Agreement (FTA) and the North American Free Trade Agreement (NAFTA), north-south trade links have strengthened and increased.

INSERT FIGURE 1.4

With an increase in trade flow movement over the Canadian-American international boundary, provinces and states in the region can specialize and implement economies of scale which will result in higher productivity.

For example, Alberta can specialize in producing wheat and oil while Washington can specialize in the production of computers or other high-tech commodities. This method will result in lower production costs and higher productivity that will benefit each economy. Each province and state will have a comparative advantage by trading these commodities and this will strengthen the economic welfare of each province. Alberta will be more productive in producing and trading wheat compared to developing computer software.

Organizations like PNWER and the governments of both Canada and the United States have been working on trade liberalization policies. The remainder of this chapter focuses on the prospects and impediments to increasing international trade in the region.

Deepening Free Trade in the Pacific Northwest Economic Region

As noted previously, The Pacific Northwest Economic Region (PNWER) is a public and private sector organization made up of representatives from the five states and two provinces of the Pacific Northwest, Alaska, Alberta, British Columbia, Idaho, Montana, Oregon and Washington. The group includes both legislative representatives and government personnel. The mandate of PNWER is to make the Northwest a major player in the global economy through regional co-operation and joint ventures, such as joint trade promotion activities. \ While this organization has been meeting twice a year for a few years now, its members only decided in 1995 to make the organization a vehicle for trade liberalization within the region by identifying and eliminating state and provincial barriers to intra-regional trade in goods and services.

PNWER’s ability to change regulations that affect trade in the region may be impeded by some of the existing laws that govern continental trade relations. Despite improvements made by the Canada-United States Free Trade Agreement (FTA) and its successor, the North American Free Trade Agreement (NAFTA), there will be no real free trade within the Pacific Northwest without the co-operation of state and provincial governments. This is so because states and provinces have jurisdiction over many regulations that can act as barriers to trade, such as product standards and licensing requirements.

NAFTA provisions, such as non-discrimination rules and tariff elimination schedules, have done much to liberalize Canada-United States trade. Still, there are other vehicles through which free trade may be achieved in the Pacific Northwest. One vehicle is a formally negotiated trade agreement, such as the Agreement on Internal Trade between the provinces and territories of Canada. A second vehicle is a more informal and ad hoc method where governments cooperate on a project-by-project basis. The former method ensures a broad-based effort that benefits a cross-section of the economy; the latter has the advantage of achieving progress in more manageable chunks and lessens the chances that provinces and states will intrude upon federal jurisdiction over trade. Thus far, PNWER has elected to use the latter method by developing projects in sectoral workshops, but the existing secretariat could act as a vehicle for either method of trade liberalization in the region. Both approaches could contribute significantly to trade liberalization in the Pacific Northwest. However, constitutional laws in both Canada and the United States may restrict the scope of PNWER's trade liberalization activities.

Constitutional Basis of State and Provincial Trade Barriers

In the United States, the Constitution grants to Congress the power "to regulate Commerce with foreign Nations, and among the several States" (The Constitution of the United States 1976). In contrast to Canada, the federal government of the United States has retained strong unilateral powers to deal with barriers to interstate commerce (Schwanen and Trebilcock 1995).

In Canada, the federal government can enter into treaty obligations, but their implementation as domestic law must be consistent with the division of powers between the federal and provincial governments under the Canadian Constitution (Hogg 1985). As a result, Parliament may not have the constitutional authority to enact legislation implementing international trade agreements where the subject matter falls within provincial jurisdiction.

While Parliament may have sufficient authority under its trade and commerce power to fulfill its obligations under NAFTA with respect to matters of international trade, the Canadian Constitution provides little guidance regarding the manner in which the federal government may implement its NAFTA obligations with respect to standards and other provincial matters (Canadian Constitution 1982). Parliament has exclusive jurisdiction to regulate the importation of goods into Canada. In general, however, only a province may regulate the manufacture, possession and sale of products inside a province. Thus, while Parliament has exclusive authority to impose or eliminate tariff barriers to trade, its authority to regulate non-tariff barriers to trade, such as standards, remains ambiguous.

 The North American Free Trade Agreement (NAFTA)

The fundamental principle of most trade agreements is national treatment. National treatment requires countries to treat imports the same as domestic products. In other words, this rule forbids discrimination against foreign products. Most of the remaining rules in trade agreements either elaborate further upon the principle of national treatment or set out exceptions to the rule.

 One of the central objectives of the NAFTA is to "eliminate barriers to trade in, and facilitate cross-border movement of, goods and services between the territories of the Parties" (NAFTA, Article 102(1)(a)). As the NAFTA is an agreement between federal governments it is not necessarily binding on states and provinces. The agreement only asks states and provinces to treat imports from other NAFTA countries no less favorably than they treat imports from other states or provinces.

 This state/provincial rule of non-discrimination has an important "multiplier" effect on any efforts made to reduce barriers to trade between Canadian provinces under the Canadian Agreement on Internal Trade (CAIT) or within the Pacific Northwest under PNWER. If Canadian provinces treat each other's products more favorably under CAIT, the NAFTA requires them to treat American and Mexican products no less favorably. If PNWER states and provinces eliminate trade barriers to each other, they will have to eliminate those same barriers for states and provinces beyond PNWER. Thus, generally speaking, neither CAIT nor PNWER can limit the benefits of trade liberalization efforts to their respective members without violating the NAFTA.

The Canadian Agreement on Internal Trade 

The purpose of the Canadian Agreement on Internal Trade (CAIT), which took effect in July 1995, is to eliminate obstacles to the flow of goods, services, persons and capital within Canada. Under the CAIT, Canadian provinces have agreed not to discriminate against each other's goods, services, persons, and investments, not to restrict movement across provincial boundaries and not to maintain measures that operate to create an obstacle to internal trade. The agreement does, however, provide a large loophole that allows the provinces to disregard these obligations in order to pursue a "legitimate objective.” Legitimate objectives are defined as health, safety or environmental protection, labor standards, and affirmative action programs. Such measures are not to be used as disguised barriers to trade that exclude goods and services from other provinces that meet the legitimate objective. The provinces have also agreed to reconcile differences in provincial standards and to cooperate in addressing regulatory differences that act as barriers to trade, including occupational standards. The agreement also addresses discrimination in public sector procurement, investment restrictions, incentives for business to relocate from one province to another, and transportation (Schwanen and Trebilcock 1995). 

The CAIT has been criticized for failing to incorporate more effective rules to ensure harmonization and mutual recognition of provincial standards, in contrast to specific rules employed by the European Union:

If PNWER chooses to seek a formal agreement amongst its members to liberalize trade within the region, it would be wise to study both the CAIT model and the EEC mechanisms to ensure that the most effective rules and institutions are put into place to achieve a free market. Otherwise, agreements to liberalize trade run the risk of becoming agreements to talk rather than vehicles for eliminating trade and investment barriers. In this regard, the PNWER secretariat might consider the advice of Daniel Schwanen, who comments as follows on CAIT procedures:

If PNWER members choose to enter into a formal agreement to liberalize trade, the PNWER secretariat could be used as the primary vehicle for developing measures to eliminate barriers to trade within the Pacific Northwest.

 PNWER as an agent of trade liberalization in Cascadia: prospects for the future

The methods PNWER will use to liberalize trade in the Pacific Northwest will depend on collective goals. If the membership wishes to restrict the benefits to the PNWER membership, the methods will have to be chosen in light of the legal consequences they will produce under NAFTA and under constitutional laws. 

NAFTA's rules regarding non-discrimination may require PNWER trade benefits to be extended to Mexico, and to non-PNWER states and provinces. CAIT rules could require the extension of other benefits to the rest of Canada. Federal jurisdiction over inter provincial trade and interstate commerce under the Canadian and United States constitutions, respectively, would give federal governments the power to intervene in PNWER's efforts, perhaps taking such decisions regarding who benefits out of PNWER's hands. Federal jurisdiction over international agreements might prevent any PNWER agreements from having legal effect, and require federal participation in any PNWER negotiations (Fraser Institute 1993). All of these issues should be considered prior to proceeding with any action plans.

 Conclusion

This chapter has offered a snapshot of current regional initiatives and priorities in Cascadia. Clearly, there is a common geographic, economic and cultural basis for greater regional integration. A number of critical questions must be answered if regional opportunities are to be realized and if an effective “cross-border region” is to become a reality. Obviously, a broad, long-term vision is critical. In this context implementation of an agenda depends on the will of the region’s leaders, their ability to achieve consensus on priorities, and their willingness to commit resources to addressing them.

Successful implementation also depends on the creation of institutional mechanisms for cross-border collaboration. Some of these initiatives can be undertaken by existing agencies with relative ease, whereas others are more complex and require government to government agreements, action by bi-national (or, even, tri-national as in the case of NAFTA) groups or agencies, and new or at least redesigned institutions. This chapter has demonstrated that wide variety of individuals, groups, organizations and governments have accomplished a great deal in a relatively short period. It is now necessary to sustain and channel this energy into targeted action.

Acknowledgments

 The authors would like to thank Leeland Hrushkin, a work study student from the Faculty of Business Administration at Simon Fraser University, for his research assistance. We also recognize the support of Simon Fraser University at Harbour Centre, particularly Patricia Gustafson and Velma Liland.

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