let's start with trade. the key issue for canada is to reduce “ border risk, ” that is, guarantee canadian producers and service providers access to u. s. markets without hassle and expense at the border, and without the risk of suddenly being shut out of those markets by some discretionary u. s. action. this is important. here are some of the steps that could help in this respect : · a common external tariff - that is, a customs union and common border practices for imports from, and exports to, overseas markets · harmonization of trade and commercial policies and regulation · an end to the application of trade remedies within north america and · a uniform policy with respect to federal and state / provincial subsidies. we could also work towards broadening nafta coverage to include agricultural products, although there are clear difficulties in this area. and we could work to remove barriers to trade in cultural, legal, financial, and communication services, although, here again, harmonizing regulatory regimes at the federal and state / provincial levels would be very difficult. i must tell you that arriving at an agreement on measures to reduce border risk or to broaden the scope of nafta won't be easy. most of the easier steps have already been taken. remember, too, that the americans have different concerns with respect to mexico than they have with respect to us. there are many practical and political challenges to be overcome on the way. but if we could reach agreement on deepening and / or broadening nafta, it would be extremely valuable. it would spread the benefits of competition across more industries, reduce uncertainty stemming from unilateral trade actions, and greatly reduce non - tariff barriers ( which are often even greater impediments to trade than tariffs ). and if we could agree on common external trade rules and tariffs, rules of origin could be eliminated and matters at the border would be enormously simplified. let me now turn from trade in goods and services to other issues related to economic integration, or what the europeans call, the creation of a “ single market. ” these issues largely relate to the harmonization of regulatory regimes, not only with respect to the market for goods and services, but also the markets for capital and labour. there are efficiency gains to be made from moving to common regulatory standards in north america. not only would common standards reduce the costs of compliance ; they would also allow our entrepreneurs to compete with the americans on a more

was also considered to be well in line with the ambitions in other countries in europe. since 1993 the way the riksbank works has been developed quite a bit. this applies to our internal procedures, the intellectual policy framework and our external communication. since this has been my primary task during the last five years, i could go on speaking about it for ages but i shall confine myself to a set of issues related to the role of the inflation forecasts and policy rules. in my opinion, the focus on the combination of a specific, symmetric target and published forecasts set by the policymakers has been important for monetary policy ’ s credibility. by consistently presenting our forecasts and acting accordingly, we have created greater freedom of action than would otherwise have been feasible. it has been a short - cut to credibility. my favourite example is the autumn of 1998. at that time, in the midst of a fairly lively discussion of interest rate policy, similar to that in the rest of europe, we managed to cut our rate in several rapid steps without being accused of political bias. we could make our point by referring to a very concrete picture of our view on inflation. it is sometimes said that you need a firm foundation before venturing to publish forecasts. i don ’ t subscribe to that. admittedly the riksbank began by just compiling inflation indicators. it was not until 1996 that we published really comprehensive accounts of economic tendencies and inflation, followed in 1997 by the first projections of inflation. however, i personally believe that an understanding of how the riksbank acts could have been achieved sooner if we had started earlier with fuller accounts of inflation and stuck to them in policy. in this context the recent brasilian experience is interesting. in time the policy framework was augmented with what could be called a rule of action or a policy rule. we made it clear that if inflation is expected to exceed the 2 % target in the coming one to two years, then we will normally raise the interest rate and vice versa. this formulation reflects our judgement that policy ’ s effects mainly occur after a time lag of twelve to twenty - four months. the rule of action has made policy even clearer. in principle, by relating new information to our most recent forecast, market players are in a good position to form a picture of policy ’ s direction and we can see that when we compare their forecasts of the repo rate with our own. however, one should be aware that there is a risk that