Vision for new trade bloc harkens to history

Atlantica: Back to the future

By David Shipley

SAINT JOHN – Hundreds of business professionals and bureaucrats gathering in Saint John today will be looking to the past in order to plan for a better economic future for Atlantic Canada and New England.

Together they will be talking about Atlantica, more formally known as the International Northeast Economic Region, an idea which has been on the minds of CEOs, think tanks and to a lesser extent, politicians in the region for more than five years.

Though its name, Atlantica, sounds like a lost exotic city waiting to be discovered, the regional trade bloc concept potentially represents something much more real:

Prosperity, booming economies, growing populations, increased immigration and a renewed sense of hope for the have-not states and provinces of the East Coast.

The ideas sound simple: improving transportation infrastructure to move goods to and from the United States, developing energy policies that will draw commerce and boosting tourism.

But there are challenges and obstacles.

The idea will form the basis for the discussions which will take place during the Reaching Atlantica: Business Without Boundaries conference in Saint John this week. The conference begins tonight with an opening reception and kicks into high gear Friday with sessions geared toward tourism, energy and transportation.

At its core, the Atlantica concept represents a focus on the historic north-south trading relationships which once made New Brunswick and its regional neighbours economic powerhouses.

Advocates of the Atlantica concept argue it will address some of the roots of the economic decline in the East Coast, which can be traced back to the period just prior to Confederation.

Before Confederation, the Reciprocity Act of 1854 created free trade in a host of goods between Canada and the United States, powering the economies of the Maritime provinces and New England states.

Among the goods flowing through the border were grain, flour and breadstuffs, animals, meats, fruit, fish, poultry, tallow, coal and lumber. Between 1854 and 1865, trade between Canada and the United States doubled.

For New Brunswick, the period was a high point for prosperity, with lumber mills fuelling the booming shipbuilding industry in Saint John. The development of rail lines turned Moncton from a rural agriculture-based community to a major shipping hub for the Maritimes.

But protectionist forces in the United States succeeded in killing the act in 1866.

Unable to get a new agreement, the Canadian government led by Sir John A. Macdonald decided to reorient trade from the Maritimes from a North-South axis to an East-West one.

Though the signing of the Free Trade Agreement in 1988, and later NAFTA in 1994, eliminated many of the trade barriers which rose after the end of the Reciprocity Act, the legacy of more than 100 years of transportation infrastructure geared toward east-west trade remained.

While the Atlantica concept looks to the past for examples of the benefits of a north-south trading relationship, it’s also looking to the future.

With globalization a reality of the business world, Atlantica as a region is poised to become a crossroads in trade between Asia, Europe and North America.

With a new generation of massive container ships now travelling from Asia through the Suez Canal and over the Atlantic to the east and with overcrowding in major ports such as New York, the port of Halifax is poised to become an eastern gateway for trade.

From Halifax, trade will flow by road, rail, and by sea to smaller ports in the region such as Saint John. From Saint John, goods could travel by improved road links through Maine to the U.S. markets. Goods can also flow through Atlantica to central Canada, making the region a gateway for North America.

Stephen Kymlicka, a policy analyst with the Atlantic Institute for Market Studies, said investments in transportation infrastructure will mean hundreds of millions of dollars for the port of Halifax and billions for the entire region.

“For a container to come in and get loaded on a truck or a train is worth about $1,000, when you add all the benefits together. So what we say is that it’s not unreasonable for the port of Halifax over the next few years to double its capacity. If they do that, it’s an additional $550 million for the economy,” he said.

“If we’re talking about $100 million (in benefits to the port), we’re talking about literally billions for the economy as a whole.”

But it’s not just the port or big business that will benefit from the Atlantica concept, he said.

“By expanding these corridors, we have multiple options where we don’t today. If you’re looking at northern New Brunswick, virtually everything goes to Montreal right now. If you have no time constraints, maybe you can put it on a train and in three months later you get something down into lower New England,” he said.

“But if you can open a real north-south corridor into Boston, then that opens new markets so all of (companies) that are captive to single buyers in Montreal now have options and can start developing their firms straight across Atlantica.”

Atlantica is also a recognition of the growing trade relationship between Atlantic Canada and northern New England.

In a report prepared for the Atlantic Institute for Market Studies, Mr. Kymlicka noted more than 15 per cent of Atlantic Canada’s foreign trade is with northern New England. That trade grew by more than 19 per cent between 1999 and 2004, while Atlantic Canada’s trade with the rest of the world grew by just over seven per cent.

Goods headed to northern New England include footwear, forest products, agricultural products, distribution services, fishing products, and power generation transmission.

In addition to cross-border trade, Atlantic Canadian companies are also making significant investments south of the border. Companies such as Aliant, Emera, Connors Bros., McCain Foods and various enterprises owned by Irving Oil and J.D. Irving, Limited all have a stake in the northern New England market.

Neville Gilfoy, publisher of Progress Magazine, has been one of the most vocal supporters of the Atlantica concept. While the major ports and cities along the transportation corridor from Nova Scotia through New Brunswick and into Maine stand to gain from improved trade access, other businesses will also benefit, Mr. Gilfoy said.

At its core, Atlantica is about Canadians and Americans working together to compete in a globalized market, he said.

“That’s what Atlantica is – American companies partnering with francophone-owned companies in New Brunswick to do business in Germany and actually take a bigger chunk of global market share,” he said.

Anthony T. Eyton, a former senior federal government bureaucrat with the Department of Foreign Affairs and International Trade and now a trade consultant, said while Atlantica was an interesting concept, a major hurdle for it will be finding money to pay for transportation infrastructure upgrades.

“The amount of investment involved in improving infrastructure is quite enormous and is enormous in the context of the size of the economies of Atlantic Canada and the northeastern United States,” he said.

“Those are big expenditures of tax dollars.”

Mr. Eyton said Atlantica will be worthwhile even if all it accomplishes is closer ties between the Atlantic provinces.

“The individual economies of the four provinces of Atlantic Canada are so small that they do not have economies of scale, but together they would have.”

Tomorrow: The ties that bind – how improved transportation links will bolster the region.