Order Code RS22701
August 2, 2007
Security and Prosperity Partnership of North
America: An Overview and Selected Issues
M. Angeles Villarreal
Analyst in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
Jennifer E. Lake
Analyst in Domestic Security
Domestic Social Policy Division
Summary
The Security and Prosperity Partnership of North America (SPP) is a three-country
initiative that is intended to increase cooperation and information sharing in an effort to
increase and enhance prosperity in the United States, Canada, and Mexico. The SPP
was endorsed by the leaders of the three countries, but it is not a signed agreement or
treaty and, therefore, contains no legally binding commitments or obligations. The goals
of the prosperity components of the SPP are to increase cooperation and sharing of
information in order to improve productivity, reduce the costs of trade, and enhance the
quality of life. The goal of the security components of the SPP is to coordinate the
security efforts undertaken by each of the three participating nations to better protect
citizens from terrorist threats and transnational crime while promoting the safe and
efficient movement of legitimate people and goods. Congressional interest in the SPP
concerns possible implications related to national sovereignty, transportation corridors,
cargo security and border facilitation. This report will not be updated.

Background
The Security and Prosperity Partnership of North America (SPP) is a trilateral
initiative, launched in March 2005, that is intended to increase cooperation and
information sharing in an effort to increase and enhance prosperity in the United States,
Canada, and Mexico. The SPP is a government initiative that was endorsed by the leaders
of the three countries, but it is not a signed agreement or treaty and, therefore, contains
no legally binding commitments or obligations. It can, at best, be characterized as an
endeavor by the three countries to facilitate communication and cooperation across
several key policy areas of mutual interest. Although the SPP builds upon the existing
trade and economic relationship of the three countries, it is not a trade agreement and is

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distinct from the existing North American Free Trade Agreement (NAFTA). Some key
issues for Congress regarding the SPP concern possible implications related to national
sovereignty, transportation corridors, cargo security, and border security. These issues are
discussed in various sections of the report.
On March 23, 2005, President George W. Bush met with former Prime Minister Paul
Martin of Canada and former President Vicente Fox of Mexico in Waco, Texas to discuss
a number of issues including trade and economic collaboration. A major outcome of the
summit was the announcement of the SPP. The government fact sheet on the SPP states
that the SPP “energizes other aspects of our cooperative relations, such as the protection
of our environment, our food supply, and our public health.”1 The initial plan for the SPP
was to establish a number of security and prosperity working groups in those two separate
categories. The security working groups would be chaired by the Secretary of Homeland
Security and the prosperity working groups would be chaired by the Secretary of
Commerce.
Working Group Proposals and Initiatives
In June 2005, the SPP working groups offered their initial proposals to the North
American leaders on how to accomplish the goals of the SPP. In their report, the working
groups announced the completion of several proposals to increase collaborative efforts
to improve certain sectors of the economy; develop higher standards of safety and health;
and address environmental concerns. The proposals related to trade and commerce
included a signed Framework of Common Principles for Electronic Commerce;
liberalization of Rules of Origin; a Memorandum of Understanding between Canada and
the United States to exchange information and cooperate on activities relating to
consumer product safety and health; harmonization of the use of care symbols on textiles
and apparel labeling; and a document clarifying each country’s domestic procedures for
temporary work entry of professionals under NAFTA.2
In March 2006, the three countries agreed to continue to advance the agenda of the
SPP by focusing on five high priority initiatives: 1) increasing private sector engagement
in the SPP through the North American Competitiveness Council; 2) advancing
cooperation on avian and pandemic influenza management; 3) ensuring a secure and
sustainable energy supply through the North American Energy Security Initiative; 4)
developing a common approach to emergency management in all three countries; and 5)
contributing to smart and secure borders by increasing collaboration on standards and
processes.
Prosperity Components of the SPP
Goals of the SPP in the area of prosperity are to increase cooperation and sharing of
information in order to improve productivity, reduce the costs of trade, and enhance the
quality of life. The three countries agreed to establish a series of working groups to
“consult with stakeholders; set specific, measurable, and achievable goals and
1 See Security and Prosperity Partnership of North America (SPP) website [http://www.spp.gov/].
2 Security and Prosperity Partnership of North America (SPP), Report to Leaders, June 2005.

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implementation dates; and identify concrete steps the governments can take to achieve
these goals.” The prosperity working groups were established to cover the following
range of issue areas: 1) Manufactured Goods and Sectoral and Regional Competitiveness;
2) Movement of Goods; 3) Energy; 4) Environment; 5) E-Commerce & Information
Communications Technologies; 6) Financial Services; 7) Business Facilitation; 8) Food
and Agriculture; 9) Transportation; and 10) Health.3
Security Components of the SPP
The goal of the security components of the SPP is to coordinate the security efforts
undertaken by each of the three participating nations to better protect citizens from
terrorist threats and transnational crime while promoting the safe and efficient movement
of legitimate people and goods. Working groups were established to address the security
aspects of the SPP. The security working groups address three broad themes: (1) external
threats to North America; (2) streamlined and secured shared borders; and (3) prevention
and response within North America. Ten individual security working groups have been
established to address specific portions of the security agenda and include traveler
security; cargo security; border facilitation; aviation security; maritime security; law
enforcement; intelligence cooperation; bio-protection; protection, preparedness and
response; and science and technology.4
The SPP and Member Economies
The SPP is not a trade agreement, nor a form of economic integration, and goes only
as far as leading to some measure of regulatory harmonization among the United States,
Canada, and Mexico. The SPP working groups are not contemplating further market
integration in North America. Such a move would require a government approval process
within each of the three countries. In the United States, such an agreement would require
the approval of the U.S. Congress.
A free trade agreement (FTA), such as NAFTA, is the most common form of
regional economic integration. Generally, in an FTA, member countries agree to
eliminate tariffs and nontariff barriers on trade and investment within the specified free
trade area. Under an FTA, each country maintains its own trade policies, including tariffs
on trade outside the region.
In addition to FTAs, other forms of economic integration are customs unions,
common markets, and economic unions. Such agreements sometimes imply a greater loss
of autonomy over the parties’ commercial policies and require longer and more complex
negotiations and implementation periods than FTAs. Customs unions are agreements in
which members conduct free trade among themselves and maintain a common trade
policy towards non-members. These agreements require the establishment of a common
external tariff and harmonization of external trade policies. Common markets are those
3 SPP.GOV: A North American Partnership, “Prosperity Working Groups: Security and
Prosperity Partnership of North America,” [http://www.spp.gov].
4 Government of Canada, “Security and Prosperity Partnership of North America: Working
Groups,” accessed at [http://www.psp-spp.gc.ca/overview/working_groups-en.aspx].

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in which member countries go beyond a customs union by eliminating barriers to labor
and capital flows across national borders within the market. The European Union is the
most prominent example of a common market. In economic unions, member countries
merge their economies even further than common markets by establishing a common
currency, and therefore a unified monetary policy, along with other common economic
institutions. The 12 members of the European Union that have adopted the euro as a
common currency is the most significant example of a group of countries that has moved
forward from a customs union to an economic union.
Some proponents of economic integration in North America have maintained that
the emergence of China and India in the global marketplace may be putting North
America at a competitive disadvantage with other countries and that NAFTA should go
beyond a free trade agreement. Some observers have written policy papers proposing that
the U.S. government consider the possibility of forming a “NAFTA-Plus,” a “North
American Union,” or even a common currency called the “Amero.”5 Critics of this level
of economic integration believe that NAFTA has already gone too far and that it has
harmed the U.S. economy and undermined democratic control of domestic policy-
making.6 Others suggest that the SPP may be more than an initiative to increase
cooperation and that it could lead to the creation of a common market or economic union
in North America.7 However, as previously noted, if the United States were to potentially
consider the formation of a customs union or common market with its North American
neighbors, it would require approval by the U.S. Congress.
Transportation Corridors
One of the stated goals of the SPP is to improve the safety, security, and efficiency
of the flow goods between the three countries. The majority of trade between the United
States, Canada and Mexico is transported by land modes (truck, rail, and pipeline). U.S.
freight trade with Canada and Mexico more than doubled in value between 1996 and
2006, growing from $419 billion in 1996 to $866 billion in 2006.8 Trucks are the
dominant mode for transporting goods between the United States. and its NAFTA
partners, accounting for 62% ($534 billion) of the value, and 26% of the weight of total
trade in 2006.9 This growth in the volume of freight is placing and increasing burden on
transportation systems, and particularly the road network.
5 U.S. Council of the Mexico-U.S. Business Committee, Council of the Americas, A Compact for
North American Competitiveness, April 2005; Grubel, Herbert G., The Fraser Institute, The Case
for the Amero: The Economics and Politics of a North American Monetary Union, September
1999.
6 Public Citizen, Global Trade Watch, North American Free Trade Agreement, see
[http://www.citizen.org].
7 Corsi, Jerome R., The Plan to Replace the Dollar with the ‘Amero’, May 22, 2006.
8 Bureau of Transportation Statistics, Increased Trade Spurs Growth in North American Freight
Transportation, May, 2007, accessed at
[http://www.bts.gov/publications/bts_special_report/2007_05/pdf/entire.pdf].
9 Ibid.

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Some observers contend that the SPP may ultimately lead to a so-called “NAFTA
Superhighway” that would link the United States, Canada, and Mexico with a ‘super-
corridor’.10 The federal government however, has stated that there are no plans to build
a “NAFTA Superhighway,” and that no super-corridor initiative of any sort is a part of the
SPP.11 Further, no legal authority exists and no funds have been appropriated to construct
such a superhighway, nor are there current plans to seek such authority or funding.12
States regularly undertake highway construction and improvement projects
independently of the SPP. As noted above, the nation’s freight transportation system is
being exposed to an increasing burden from cross-border trade.13 States and localities
undertake highway projects to address the impacts of this increasing burden on the
roadways, particularly in border states. Planning for these projects along the border often
requires consultation with the neighboring NAFTA partner, as expansions of port access
roads, additional lanes and bigger plazas, impact the flow of traffic through the port, and
therefore the flow of traffic entering the neighboring country. Among other efforts, the
SPP Transportation Working Group is analyzing border trade and traffic flows to support
border infrastructure planning and prioritization.
Cargo Security and Border Facilitation
One of the central tensions in border management policy concerns how to design
policies that facilitate the efficient entry of legitimate cargo while simultaneously ensuring
that a sufficient level of security and scrutiny is applied to deny the entry of illegitimate
cargo. Two of the ten SPP security working groups are devoted to cargo security and
border facilitation. In the immediate aftermath of the terrorist attacks of September 11,
2001, the U.S. border was virtually closed. The U.S. Customs Service went to its highest
state of alert and began searching every vehicle entering the U.S. from Canada and
Mexico. Delays of up to 12 hours were experienced at some ports of entry in Michigan
and New York.14 Since 9/11, the U.S. government has undertaken a number of initiatives
aimed at improving cargo security and the facilitation of legitimate or low-risk cargo.
Programs such as the Free and Secure Trade (FAST) program (a joint U.S.-Canada, and
10 See for example, Corsi, Jerome, I-69: Yet Another NAFTA Superhighway, accessed at
[http://www.humanevents.com/article.php?id=16966]; or Schlafly, Phyllis, The NAFTA
Superhighway, August 23, 2006, accessed at
[http://www.eagleforum.org/column/2006/aug06/06-08-23.html]; or for a rebuttal ofsome of
these claims see for example, Dine, Philip, “Superhighway myth feeds on fear,” St. Louis Post-
Dispatch, May 19, 2007.
11 Security and Prosperity Partnership of North America, Myths vs. Facts, accessed at
[http://www.spp.gov/myths_vs_facts.asp].
12 Ibid.
13 See, Bureau of Transportation Statistics, Increased Trade Spurs Growth in North American
Freight Transportation, May, 2007, accessed at
[http://www.bts.gov/publications/bts_special_report/2007_05/pdf/entire.pdf].
14 Remarks of Customs and Border Protection Commissioner Robert Bonner, September 12,
2004, at the Customs World London Summit, at
[http://www.cbp.gov/xp/cgov/newsroom/commissioner/speeches_statements/archives/2004/0
9212004_customs_world.xml]

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U.S.-Mexico program), and the Customs-Trade Partnership Against Terrorism (C-TPAT)
program (a public-private supply chain security initiative) are two well-known examples
of post-9/11 initiatives that seek to provide increased security while also providing
expedited customs-clearance to pre-vetted shipments.
One initiative being considered under the SPP is known as pre-clearance, which has
long been in place at airports, but which has remained difficult to implement at the land
border. A related concept is known as reverse inspections which is essentially pre-
clearance conducted on both sides of the border. Under the reverse inspection scenario,
U.S. customs officials would be stationed in Canada to process and clear cargo en-route
to the U.S. before the cargo reaches the U.S. border. Similarly, Canadian customs
officials would be stationed in the U.S. to process cargo en-route to Canada from the
United States. Proponents of reverse inspections maintain that this process offers
increased security because it would allow, for example, U.S. customs officers the
opportunity to intercept high-risk cargo before the truck reaches the bridge or the booth
at the on the U.S. side of the border. Critics of the reverse inspection proposal cite
sovereignty issues as a primary obstacle, but there are a host of other issues including the
different authorities held by each country’s customs agencies, and a variety of different
legal issues.15
Progress was made, under the U.S.-Canada Shared Border Accord and the SPP,
towards developing a pilot program to test reverse inspections at two different land border
ports along the U.S.-Canada border.16 To date however, the pilots have not gone
forward17, and it is unclear whether or not the obstacles to reverse inspections can be
overcome in the future.
15 See, Tower, Courtney. “Pre-clearance scrapped after U.S. breaks of Canada talks,” Journal of
Commerce Online, April 27, 2007, citing the concerns of the Department of Homeland Security
regarding the restrictions Canadian law would have placed on U.S. searches, investigations, and
fingerprinting. See also, Nakashima, Ellen. “Fingerprint Dispute Dooms Border Site,”
Washington Post, May 24, 2007.
16 U.S. Department of Homeland Security. “Security and Prosperity Partnership: Implementation
Report-Security Agenda,” Fact Sheet, June 27, 2005. Accessed at
[http://www.spp.gov/SECURITY_FACT_SHEET.pdf?dName=fact_sheets].
17 Tower, Courtney. “Pre-clearance scrapped after U.S. breaks of Canada talks,” Journal of
Commerce Online, April 27, 2007.

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