Deepening U.S. trade and safeguarding borders key to Canada's prosperity.

Canada-U.S. economic integration has outpaced the capacity of existing trade agreements and the physical infrastructure to manage the growing volumes of trade, putting Canada's economic security at risk, the Conference Board of Canada says in a report released recently.

The report, In Search of a New Equilibrium in the Canada-U.S. Relationship, points out that Canada's economic prosperity depends on securing its future as a trading nation, both in North America and more broadly. Canada needs to safeguard the border, ensure the safe movement of goods and people, and address the deficiencies in the North American Free Trade Agreement (NAFTA).

"Even before 9/11, the sharp increases in trade levels put stress on the border. Furthermore, neither the Free Trade Agreement nor NAFTA adequately covers the growing importance of the services sector as an engine of economic growth," said Charles Barrett, senior vice-president of the Conference Board.

"Future trade liberalization efforts should focus on services. In particular, North American trade would benefit from an integrated transportation sector, so truck, air and marine modes of transportation could enjoy the same treatment as most of the goods they carry."

The report notes that energy and energy services are also candidates for further bilateral trade liberalization. But, in general, Canada should use its leverage in the World Trade Organization to remove barriers to trade in services.

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This report is part of The Canada Project, a three-year Conference Board program of research and facilitated dialogue aiming to help improve Canada's standard of living and position in North America and the world.

To view the report visit

www.conferenceboard.ca/boardwise.