David Dodge has called for greater harmonization of securities rules both between provinces and between Canada and the U.S.

The Bank of Canada Governor stressed that he was commenting as an economist, and not as a politician, as he spoke about the issue of North American economic integration.

Dodge was the opening night speaker Thursday at the annual Couchiching Summer Conference in Geneva Park, Ont.

For 72 years the conference has gathered together some of Canada’s most influential thinks to debate topics of current interest.

Dodge said he wasn’t necessarily advocating greater integration, although he is a committed free trader.

He argued that some sections of NAFTA need further work to eliminate all non-tariff barriers (such as countervailing and anti-dumping duties) and reduce the costs to industry of complying with a number of special rules. “Dealing with these problems also means closer integration of regulatory regimes in North America,” he said.

Dodge noted that there are many non-tariff impediments to achieving the full benefits of economic integration. “Among these, importantly, are the different national, provincial, or state regulatory regimes,” he said. “Here, it seems to me that one of the key questions we should be asking ourselves is whether we have given sufficient consideration to “harmonizing” a number of our regulations with those of the United States. By “harmonizing,” I mean working to make the regulations of the two countries compatible or convergent, but not necessarily identical.”

There are efficiency gains to be made from moving to common regulatory standards in North America, Dodge said. “Not only would common standards reduce the costs of compliance; they would also allow our entrepreneurs to compete with the Americans on a more level playing field.”

This, Dodge allowed, would likely mean moving in line with U.S. standards, as its market is so much bigger than Canada’s. He admitted that U.S. standards may not always be absolutely ideal in a Canadian context. “But the point is that we should not reject them out of hand because they are not perfect. Rather, we should assess them very carefully. And we should always be asking, Would we be better off adopting U.S. standards, so we can have harmonized regulatory regimes across North America, rather than adhering to our own, even though ours might be better suited to our unique circumstances?”

“What I’m saying is that, if we are going to preserve different regimes of economic regulation, we’d better have solid reasons for doing so. And we’d better make sure that the differences we maintain will indeed lead to better outcomes for Canadians,” he said.

Dodge indicated that the divergence between provinces in standards for labour, financial markets and other services is “a big problem in Canada”. He noted, “By and large, this kind of diversity does not serve us well. So it is very important that we also harmonize regulatory standards at home.”

Looking specifically at the capital markets, Dodge said that the current reform climate presents “a real opportunity to achieve greater harmonization of rules in North America” He said, “There is a willingness at the moment, on the part of authorities everywhere, to try to find a reasonable mix of principles and rules for accounting standards and securities regulation. We should seize the opportunity—and I believe we are in the process of doing so—to achieve greater uniformity of standards, not only with the United States but also among Canadian provinces.”