Surprise on Canada-US Bridge—Governors can be statesmen too

Despite its long-term value and other more short-term distractions, the new Republican governor of Michigan Rick Snyder has finally declared himself in favour of the $5.3 billion Detroit River International Crossing project.

“The surprise endorsement from Rick Snyder, a Republican sworn in as Governor on Jan. 1, breathes new life into a long-delayed bridge proposal backed by Ottawa as a solution to costly delays at North America’s busiest commercial crossing. Goods worth $150-billion—or one-quarter of the merchandise trade between Canada and the United States—flow across the congested Ambassador Bridge every year.

“This new bridge will create jobs, strengthen our economy and help establish Michigan as a hub for global commerce,” Mr. Snyder said in an address Wednesday night to the state legislature in Lansing.”

Click on: http://www.theglobeandmail.com/report-on-business/michigan-governor-gives-new-life-to-bridge-proposal/article1877958/

The governor’s rationale is heartening. It’s easy to talk about job creation in the midst of a local recession. But there are always alternative ways to create jobs—with more direct local benefits than building a bridge to Canada. It’s more impressive for a Mid-West governor to reaffirm the value of open trade.

Today, thinking positively about markets is actually statesmanlike. Being a “hub of international commerce” doesn’t generate the excitement it did a generation ago.  Michigan may have an economy as big as Taiwan, as the latest Economist calculates. However, between 2002 and 2009 it has lost 44% of its private manufacturing jobs.

Declaring for a bridge that will enhance the security and growth of NAFTA trade with Canada is a tribute, not only to Canadian and US international diplomacy, but the commitment of individual politicians to superior benefits of free trade.

The border continues to militate against this project and the Governor still has work to do to persuade fellow Republicans in the Michigan state legislature. Nevertheless, it’s nice to see a politician, unforced by parochial calculation, embracing a sound economic idea.

           

A necessary bridge doesn’t get built

Canada and the United States are winding up the biggest public capital-spending boom since the Great Depression. Yet, the most important strategic project for both countries—a new bridge between Windsor, Ontario and Detroit, Michigan—didn’t even get started. Ironically, being in the interest of both countries, rather than wholly in the interests of one, may be the problem.

Today, the old Ambassador Bridge conveys $150 billion, or one-quarter of Canada-US annual trade. It is congested, old, and stands alone. It adds to the costs and risks of cross-border trade. If it was obstructed, bombed, or shut down, hours, if not days, would be added to the movement of vital industrial goods and components.

Despite unanimous support in Canada and a Canadian government offer of financial assistance, Michigan still hasn’t agreed to support a second bridge. Barrie McKenna neatly spells out one of the causes of delay: Manuel (Matty) Moroun, the owner of the Ambassador Bridge, who wants to keep his commercial monopoly. 

Click on: http://www.theglobeandmail.com/report-on-business/the-foreign-owner-of-canadas-vital-us-trade-link/article1807863/

Moroun’s importance, however, doesn’t dramatize the power of one citizen as much as he does the low priority that American decision-makers assign to building a more integrated (and therefore more world-competitive) North American manufacturing heartland. Free trade is still a good progressive idea, but not that persuasive when American governments are busy creating American jobs.

American automotive and other large manufacturers likely favour and certainly would benefit from the proposed $5.3 billion (US) Detroit River International Crossing project (DRIC). However, in politics, local spending trumps international spending even if it would generate benefits on both sides of the border.

This impasse isn’t another precious example of anti-Canadianism or American protectionism per se. It is a simple illustration of political arithmetic: a $billion spent in Detroit on its infrastructure will be seen as a $billion benefit to American voters. The Ontario Government made the same me-first calculation when it set a strict buy-Ontario procurement requirement for subsidized renewable energy projects.

Public money is relatively scarce, and so the existence of the border—and, consequently, separate electorates—will continue to militate against this strategic investment and other ideas to make our economies work more effectively together.