The United States (U.S.) and Mexico are partnering to create cross-border economic strategies, such as the Cali-Baja Bi-National Mega Region. Baltic countries are joining forces to develop a macro-regional economic strategy.
So too are countries along Danube River and in the Persian Gulf. Specialized economic development zones, also known as Free Trade or Foreign Trade Zones (FTZ), now numbering in the thousands around the globe, are often a unique feature of these multi-national and bi-national efforts.
What these countries are doing to spark cross-border collaboration, trade, innovation, tourism and foreign direct investment weighed heavily on me as I began planning the Council of the Great Lakes Region’s first Great Lakes Economic Forum in Chicago last April. I had a strong sense from these developments that a new conversation was urgently required in the Great Lakes and St. Lawrence Region to explore how we are positioning this region to win in today’s borderless, global economy.
What I didn’t know was whether government leaders, policy experts and business executives agreed with me, especially given the historical success of the region and the competitive nature of its individual states, provinces and big cities. To my surprise and delight, 150 participants from government, academia, industry and the nonprofit sector registered. Even better, a who’s who of speakers signed on to speak, including Canada’s Governor General David Johnston, Illinois Governor Bruce Rauner, Chicago Mayor Rahm Emanuel, Saint Lawrence Seaway Administrator Betty Sutton, and our respective Ambassadors – Gary Doer and Bruce Heyman.
Three messages emerged from the speeches, discussions and intense networking on the margins of the Forum. First, as a region, we rediscovered there are many more similarities among us than there are differences. Second, we share trade ambitions, opportunities and challenges. Third, we are stronger together than we are apart in today’s global economy. So, where might this lead us?
In considering an action plan for the Great Lakes-St. Lawrence Region since the Forum, I have been reminding myself of the words of the Governor General of Canada and Ambassador Heyman. The former charged the Council to create “a stronger and more dynamic culture of collaboration that harnesses the particular strengths and features of this great region,” while the latter encouraged the Council to make “no small plans” in finding new ways of deepening the U.S.-Canada relationship in the region and growing the region’s economy safely and sustainably.
In this spirit, I propose a bold idea as we begin a new year – the creation of a Great Lakes Economic Strategy and FTZ, which would represent a monumental shift in the way we promote and leverage this vital continental trade corridor and global gateway. And the timing couldn’t be better. As global supply chains are stretched, value chains created, international trade barriers shrunk and new markets opened, macro-regions straddling nations, like the Great Lakes and St. Lawrence Region, are becoming increasingly distinct and important.
To illustrate, the Great Lakes-St. Lawrence Region represents USD$5.8 trillion in annual economic activity. This equates to the third largest economy in the world if it were country, behind only the U.S. and China. Moreover, it accounts for about half of the total value of goods imported and exported between the U.S. and Canada and a third of combined American and Canadian employment. Simply put, this region is an economic juggernaut in North America.
Hidden from view, however, a significant problem exists. The Region’s relevance and strength are slowly eroding due to globalization, but also because of growing policy fragmentation at the sub-national and national level. A new economic development strategy and FTZ would put the region on a better path to creating a more modern, business friendly environment and could offer an enormous boost to the Region through joint trade promotion and economic policy development, favourable tax and tariff treatment across the entire region, and greater flexibility in how companies warehouse, handle and transport goods.
Expanding the concept further, a regional economic strategy and FTZ could increase employment opportunities for licensed professionals and certified tradespeople living in the zone if we found a way for them to work on either side of the border when labour shortfalls develop. Further, a new strategy and FTZ could act as a catalyst to optimize the performance of supply chains; build connective tissue to global value chains; drive regional innovation with a ‘deploy globally’ mindset; and, align the way we plan and invest in big regional infrastructure that supports trade and travel, such as our roads, bridges, waterways, rail and airports.
Finally, an economic strategy and FTZ could provide the basis for advancing other recommendations recently proposed by Dr. Christian Ketels of the Institute for Strategy and Competitiveness at Harvard Business School that would also help to swiftly reposition the region, including:
- Conducting a strategic cluster review in the automotive sector, aiming to understand how the Region’s inherent cluster strength in this area can again be translated into economic success.
- Establishing a cluster network with the emerging water technology groups across the Region exploring the economic potential of this unique asset the Region is developing.
- Launching a policy peer group for the study and exchange of best practices in cluster renewal and diversification, building on some of the opportunities identified in this report.
- Creating a Great Lakes – St. Lawrence Region STARS challenge fund to provide competitive funding for a network of clusters willing to collaborate in upgrading competitiveness.
- Producing a regular State of the Great Lakes – St. Lawrence Region report to track competitiveness and collaboration across the Region.
Advancing the idea of a truly bi-national economic development strategy and FTZ in the Great Lakes-St. Lawrence Region will require leadership by the Council, creativity on the part of the Governments of Canada and the United States, buy-in from some of the states and provinces that make up the Region, participation from the Seaway, and the full commitment of the private sector. As well, it will take patience and public and private sector funds to run it. But if we put our shoulder into it, history has shown that this region, working together, can do miraculous things.
In a macro-region like the Great Lakes and St. Lawrence Region, when Michigan succeeds, so do Ontario and Quebec, and when Ontario and Quebec prosper, so do Illinois and Minnesota. More importantly, when this Region’s economy does well, Canada and the U.S. do extremely well. As we look to create more jobs, improve our competitiveness and secure the region’s long-term prosperity, let’s recognize that the time has come for big ideas that will transform the way we collaborate and organize commerce in this region. A bi-national FTZ and economic development strategy would be right on target.
Mark Fisher is the President and CEO of the Council of the Great Lakes Region. The Council will be hosting its second Great Lakes Economic Forum in Toronto from April 24-26, 2016.