On a sunny Thursday back in September, a group of powerful business people, lobbyists and politicians quietly got together in midtown Toronto to discuss relations between Canada and the United States.

Trade between the two has grown astronomically in the past decade, but a sense of disquiet pervaded the rather grandly titled Canada-U.S. Executive Summit. All the extra traffic was causing problems at the border, and a myriad of trade disputes continued to fester.

Canadians in the crowd expressed dismay at Washington's sanctions on such things as softwood lumber, which often hurt U.S. consumers by raising prices. "Just where," one of them asked panelists Geraldine Ferraro, the former vice-presidential candidate, and Haley Barbour, a former Republican Party chairman from Mississippi, "would you be without Canada?"

"Way-ell," the colourful southerner responded, "I'd say we'd be pretty close to the North Pole."

Barbour was just trying to be funny, of course. He knows full well that the spectre of an American takeover has haunted Canadians since before Confederation. But he might not crack such a joke today.

Five days after the Toronto gathering, terrorists struck the World Trade Center, and suddenly, the relationship between Canada and the United States was no laughing matter. Six months later, and the subject is even more serious. In fact, it hasn't been so hotly debated since the battle over free trade.

That was 15 years ago, and since then most Canadians have come to accept the once-controversial trade deal. It has been credited with pressing Canadian businesses to modernize, raising living standards, boosting employment, as well as turning the border into Canada's lifeline. Almost 40 per cent of Canadian-made goods and services now flow south - more than twice the figure in 1990, and worth slightly more than the 2.5 per cent of U.S. output shipped north.

But in the dark days that followed Sept. 11, heightened U.S. concern about security showed that, as well as being vital, Canada's economic lifeline is vulnerable. The Ambassador Bridge from Windsor, Ont., to Detroit handles one-sixth of all traffic between the world's two pre-eminent trading partners, but on Sept. 13, the lineup of southbound trucks stretched for 36 kilometres. The scene was repeated from coast to coast. Cross-border commerce had all but ground to a halt.

The immediate crisis passed, but the Bush administration is still at war with terrorism and still preoccupied with border safety. It is pressing Canada on issues ranging from adopting similar visa and refugee policies to forging a continental defence network.

Meanwhile, more and more forward-thinking Canadians have begun to look at the border and wonder. If it causes so many problems and can so easily become an economic bottleneck, do we really need it? Perhaps it should be nothing more than a line on the map.

"This is the issue of our generation," says David Zussman, a former aide to Prime Minister Jean Chrétien who has examined continental ties as president of the Ottawa-based Public Policy Forum. "I suspect we will continue to see further integration of our economies, and therefore of our societies, unless Canadians eventually decide otherwise."

The Ambassador Bridge on Sept. 13, 2001. The security clampdown has traffic bound for the United States backed up 36 kilometres. The scene is repeated from coast to coast. Cross-border commerce has ground to a halt. Credit: DAN JANISSE/CANADIAN PRESS

Polls show that Canadians have come to accept closer ties with the United States. But many experts on Canadian-U.S. relations are concerned that the federal government isn't doing enough to grapple with the implications of the growing integration.

A hands-off approach favours U.S. interests, they fear; Canada should be able to "leverage" its "national advantage" by maintaining distinct policies (such as in health care and gun control) while making the most economically of living next door to the greatest power the world has seen.

One problem may be history. The Liberals opposed free trade when they were in opposition, and Chrétien isn't likely to do anything big that builds on a Progressive Conservative pact even though the North American free trade agreement remains in place. The expectation is that he will leave such issues to his successor - a delay that has drawn fire, from the south as well as the north.

"He must see the fork in the road," argues Chris Sands, director of the Canada Project at the Center for Strategic and International Studies in Washington. "Trying to just placate the Americans and do the minimum has come to be viewed in Washington as weakness.

"He's waiting, and letting us set the agenda. . . . Ottawa is losing its overall effectiveness."

That reticence may be short-lived because the Canadian public is beginning to pay attention. On Monday, for example, participants in the University of Toronto's high-profile Walter Gordon Forum on Public Affairs will discuss "Country or Colony? Canada's Relations with the United States post Sept. 11."

Employees of the North American Boundary Commission in 1873. They have built a mound on the prairie to mark the border between Canada and the United States. Credit: NATIONAL ARCHIVES OF CANADA (C-073304)

Zussman expects the debate to expand. In fact, he predicts that, at some point within the next decade, or at most two, a federal election will be fought on the issue. It will be a campaign laden with baggage from 1891, 1911 and 1988 - the years of past great battles over ties with the United States.

If the experts are right, border crossings could be stripped of their stop signs around 2020 to 2025. That would be an appropriate point in time - as far into the future as the birth of the Macdonald commission (it recommended Canada's "leap of faith" to pursue free trade) is into the past.

It is also the time frame suggested by Mexican President Vicente Fox for creating a common market involving his country, Canada and the United States. That striking proposal has earned Fox a reputation in Washington as someone unafraid of big concepts - an impression former prime minister Brian Mulroney also left while negotiating free trade. However, Mexico isn't thought to be ready for such intimate ties with the United States.

Canada is quite another story. Greater co-ordination of economic policies may make sense sooner rather than later, and likely would involve eliminating the physical border by:

• Negotiating a "customs union" that would give the two countries common policies when trading with the rest of the world and thus ease administration of their "joint economic space."
• Co-ordinating regulatory efforts on everything from the mundane (such as the size of bathroom fixtures) to the profound (such as drug approvals), again easing the oversight of what is becoming a continental economy. (To many people, the differences are already so minor they illustrate what Freud called the "narcissism of small differences.")
• Giving Canadians and Americans the right to live and work in either country.

To reasonable men all the laws of geography, politics, power, economics and common sense, the inexorable mandate of nature itself, seemed to impel a continental union . . . Why, after perfecting the unique political arrangements of North America, have these peoples failed so lamentably to perfect their economic arrangements?

Esteemed Canadian journalist Bruce Hutchison in his 1955 book, The Struggle for the Border.

In reality, the border became a problem long before Sept. 11. After the advent of free trade, attempts to speed up the flow of traffic had floundered, and customs officers were overwhelmed at having to enforce dozens, if not hundreds, of regulations.

To streamline operations and cut costs, Canadian and U.S. border guards tried to share an office, but that failed too. (Negotiations involving Sweetgrass, Mont., and Coutts, Alta., broke down over whether U.S. guards could carry their guns when going to the bathroom on the Canadian side.)

In fact, remarkably little about the border has changed in about 100 years. Europe, meanwhile, has gone from borders guarded by armies to borders marked only by two flags. Not only can vacationers travel more easily, companies can ship without restrictions and workers can seek employment wherever they want. As a result, the entire economy has benefited.

Meanwhile, those who patrol the 49th parallel are expected to do things many experts suggest they can't manage successfully or efficiently: check for drugs and other illegal products (something the police do within each country); check shipments to ensure that everything from driver to cargo are eligible for entry (something modern technology can monitor at the factory gate); collect what meagre duties remain for cross-border shoppers. Then add to that the challenge of the Internet and the fast-growing cyberspace trade in services.

"We've got to get over the word `border,' " says veteran Canadian diplomat George Haynal, now studying bilateral ties on a Harvard fellowship.

"We've got to get to the purpose, rather than the thing. It has to be seen as a shared asset because, on balance, the threats to the two of us are shared. . . . The differences we're looking for between us pale in comparison to what we face from the outside."

Guarding against those outside forces is, of course, the subject of the anti-terror talks between Deputy Prime Minister John Manley and U.S. Homeland Security Director Tom Ridge - talks that include the border and are expected to produce an agreement soon.

As well as the joint surveillance of port activities outlined in a recent interim pact, the final document is likely to call for a big expansion of "smart card" technology. Hundreds of thousands of travellers certified as not posing a risk to security (there are 200 mil-lion annual border crossings) could pass through customs in a special lane. Major companies would be able to clear cross-border shipments at the plant, subject to occasional government security audits.

There would be greater sharing of border information, more co-ordinated work abroad so that those deemed security risks are banned from both countries, better co-operation when building facilities and and possibly even the opening of some joint border posts.

All that may well boost security and assist business, but it won't go far enough for many companies that say border costs, in terms of delays and paperwork, can be as large as the tariffs eliminated by free trade. That pushes up prices and makes them less competitive in the cutthroat U.S. market.

The plan is to have Chrétien and U.S. President George W. Bush sign the deal in June at the economic summit in Alberta, but many observers still worry that it won't amount to much because some Washington politicians and bureaucrats will view it as not serving their parochial needs.

"It's too easy for special interests to block things like this in the U.S. system," says Bill Dymond, executive director of the Centre for Trade Policy and Law at Carleton University. "There needs to be a bigger idea that really will get their attention."

So the situation could turn out to be similar to the one almost 20 years ago when Pierre Trudeau's last government failed to interest Ronald Reagan's administration in working out key trade problems. It was viewed as small beer in Washington; not worth battling protectionist U.S. industries over.

Out of that failure arose a big idea - an overarching free-trade pact - and that did interest Washington, which wanted to set an ideological marker for trade talks with other countries.

This time, the big idea would be the customs union. Along with aligning various regulations in both countries, such a pact would eliminate the lion's share of work at the border and grease the wheels for its eventual demise. Then the two countries could concentrate on defending North America's transportation hubs and coastline against everything from illegal immigrants to terrorists.

A customs union involves co-ordinating trade policies so that Canada and the United States apply the same tariffs on shipments from outside North America. This would do away with the North American free trade agreement's byzantine and costly requirements - usually applied at the border - to prove that something was manufactured in North America and is eligible for tariff-free export to another NAFTA member.

With a customs union, once a product from abroad has been cleared for entry, it can be shipped between NAFTA countries hassle-free. That would significantly reduce the need for oversight at the Canadian-U.S. border, where officials spend large amounts of time checking whether products qualify for tariff-free shipment.

Co-ordination of regulatory standards would work the same way. Some of this already is being done at the industry level, as Canadian and U.S. companies - or international industry associations - seek to minimize hurdles to supplying goods and services for a variety of markets.

Governments can do the same. For example, travellers don't have to get a new driver's licence every time they cross the border. However, U.S. states ran into trouble recently in their campaign to add a magnetic strip to licences that would carry added information and combat forgers. They wanted to include Canada, but didn't know whom to call north of the border - there's no accepted procedure for such things.

As for synchronizing tariffs, the differences between those now being imposed by Canada and the United States are marginal. "There are areas that don't make any sense at all," one senior Canadian official says. "How sacred can they be?"

If not sacred, the subject is politically sensitive. A recent study done for Industry Canada on deepening economic integration refers repeatedly to customs union-like arrangements, but never actually uses the term. Instead, the concept is called NAFTA-plus.

And there are potential problems. Whatever it's called, a customs union could mean that Canada has to ban trade with Cuba, just as the United States does. As well, co-ordinating regulatory standards raises such hot-button issues as the environment and food safety, given expectations that the common standard invariably would be the American one.

But supporters of the move argue that rules can have exceptions - trade with Cuba could be allowed to continue and regulatory "harmonization" could amount instead to simply recognizing each other's standards.

Will this appease Canadian nationalists? Many consider the new agenda as free trade squared, something that's guaranteed to undermine many of the traits that make Canada distinct.

But their opponents, who won the battle 15 years ago after all, insist that dismantling the border apparatus is little more than an economic issue - ensuring even easier access to the U.S. market.

"What Canada needs is a seamless border," says Wendy Dobson, a University of Toronto professor and former Canadian finance official, who is now writing a study of future economic ties for the C.D. Howe Institute.

To people like Dobson, the logic of making the border almost unnoticeable grows daily. Sixty per cent of Canadian-U.S. trade involves cross-border shipments within the same corporation. Yet the so-called "Canada discount" - its inability to maintain its share of new investment in North America - is being blamed in part on the unwilling-ness of these companies to risk having their U.S.-bound production blocked at the border.

Canadian history, whether national or regional, will remain partial so long as the processes that led millions of migrants to move to the other side of the border remain hidden.

University of Montreal historian Bruno Ramirez in his 2001 book, Crossing the 49th Parallel.

Allowing goods to sail across the border is one thing, but most Canadians marvel at the idea of not needing a green card, of being free to work wherever they like. Few realize that, for roughly the first half of this country's existence, doing just that was taken for granted.

A century ago, one in five Canadians lived in the United States. Canadian emigration outpaced immigration in every decade between 1860 and 1900 - a reflection of the higher standard of living in the United States and the greater opportunities there. Immigration outpaced emigration in all but one decade in the 20th century, lately by a factor of roughly four-to-one. Until the first border restrictions were imposed in the 1920s, U.S. officials had offices in Canadian cities to make the trip south easier.

From 1851 to 1996, total immigration to Canada was 14.6 million; total emigration, largely to the United States, was 8.5 million.

Today, the free flow of labour would benefit workers on both sides of the border. Companies now often have to look abroad for special skills they need, just as specialized workers often do to find employment. But current immigration laws don't make it easy.

An open labour market would mean oil workers from Texas could move to Alberta - for short-term contracts or for good - as easily as Alberta oil people could go south. How much actual traffic would there be? In the European Union, only about 2 per cent of workers have taken jobs in another EU country - but the option is always there.

Freer movement also would in-crease "brain circulation," a term applied to, among other things, taking advantage of Canadians outside the country - especially in the United States. For example, their knowledge of both nations can assist cross-border trade and investment - a resource that federal government departments are beginning to tap.

"More labour mobility enhances efficiency and income growth," says Richard Harris, who teaches economics at Simon Fraser University and has studied the implications of a single labour market for the federal government.

"The benefit to Canada is the benefit of specialization. . . . You can't think in terms of one country any more; it's simply not big enough."

So, in the end, will Canadians accept all this or, as David Zussman puts it, "decide otherwise"? The debate over "continentalization" goes far beyond the seamless border to involve foreign takeovers, restrictions on foreign investment, cultural-industry protection, resource exports and a common currency.

The border is special because it is so symbolic, but eliminating it as a barrier to the flow of goods, investment and people isn't the same as erasing the distinction between two countries. France and Germany are no less independent because their citizens go back and forth without restraint.

This is about keeping foreign investment coming into Canada. Canada's interest in the globalized age demands that Canadians' access to the U.S. marketplace be as easy as access to the Canadian marketplace.

"If we lose the border in that sense, is it the beginning of the end?" a Canadian official asks. "Certainly not. No one had reason to fear it in Europe. We can still preserve our values, and act [with the United States] in ways that are in our own interest."

Like many, he considers economic integration an intelligent exercise of sovereignty, something that would serve Canadian interests by raising living standards, and therefore providing more resources for such key services as education and publicly financed medical care.

It wouldn't happen overnight - the free-trade agreement took only 18 months to negotiate, but a decade to implement. At this point, "the question is whether our leaders are willing to think and talk about this," says Robert Pastor, the author of a new book entitled Toward A North American Community.

"This is the time to raise our sights and think larger thoughts about where North America should be going."