Canada-US Trade needs nurturing

The United States and Canada: trade that needs nurturing


Special to Globe and Mail Update Published Tuesday, Apr. 26, 2011

Canada-U.S. relations have not figured much in this election. As Sherlock Holmes said of the dog that did not bark in the night, this is one of the “curious incidents” of the campaign. That Canadians like Barack Obama a lot more than George W. Bush is partial explanation. Mr. Bush was a convenient pinata for the anti-American set, while Obama still represents – for most Canadians if not for Americans – hope that we can believe in.

The Liberals, in particular, have so far resisted the temptation to play the anti-American card as we witnessed from Paul Martin in the 2006 campaign and Stéphane Dion in the 2008 campaign. Michael Ignatieff has a sophisticated sense of the United States that is closer to earlier Liberal leadership from Sir Wilfrid Laurier to Lester Pearson than Pierre Trudeau to Mr. Dion. As Mr. Ignatieff wrote during Mr. Obama’s visit in February, 2009, “We can either complain about unsolved problems or seize the opportunity to excite him with the possibilities of partnership.”

Stephen Harper could easily employ these same words. The PM deserves praise for launching the Washington Initiative around perimeter security and regulatory reform in February. Better border management was promised during the 2009 visit, but in contrast to the administration attention devoted to their southern border, this disappeared into the Potomac fog. Since 9-11 the border has thickened. Drones now fly overhead and Homeland Security has tripled the staff who stand guard. There are new fees. Given American finances this trend will only accelerate without overriding policy direction. Meanwhile, both governments add to the tyranny of small regulatory differences that impose cost and inconvenience on everything from baby seats to the Cheerios that U.S. Ambassador to Canada David Jacobson eats for his breakfast.

Such actions further devalue what has been the most successful trading relationship in the world. Cars constitute 15 per cent of our exports; 80 per cent of the components we use are imported from outside (mostly the U.S.), while 85 per cent of what we produce is exported (mostly to the U.S.). Assembly requires criss-crossing the border seven times – with inspection on each crossing. Meanwhile, boatloads of cars and parts coming from Japan, Korea and China are inspected only once. So much for encouraging North American competitiveness.

Nor is the Washington Initiative a sure thing. The Harper government has defined the vision, yet little has been offered in terms of concrete objectives and even less in terms of public consultation.

Both of us have unfinished business. The top American “ask,” also an impediment to the Canada-EU Accord, has been new copyright legislation. It has failed to pass in either of the last two Parliaments. We want a presidential waiver for the Keystone XL pipeline. The long delay reflects the administration’s ultramontane attitude toward the oil sands, with protectionist “encouragement” from otherwise uncompetitive energy “alternatives.” The threat of American environmental oversight would be a blatant application of extraterritoriality that we haven’t seen since Helms-Burton and Cuba.

Then there is the clock. New Hampshire’s January primary starts the American election cycle that will effectively close our window of opportunity. The hope was to finish the preparatory work by June, but the election has intervened. There is little evidence that the Obama administration is using this time to manage interagency consultation and congressional outreach. Nor is the U.S. business community engaged. Their involvement was critical to the free-trade agreement.

Finally, there is the President. Mr. Obama wants to generate jobs by doubling U.S. exports. It makes sense to begin with your biggest trading partner, but there is little to suggest that he accords Canada the same strategic priority as Ronald Reagan or Bill Clinton did.

Mr. Obama has reached out to China and Europe and has taken trade delegations to India and Brazil, but not to Canada. His re-election will depend on his ability to create jobs. In his congratulatory call to our next prime minister on the evening of May 2, Mr. Obama should re-ignite the initiative and get it done before the snow falls in Concord.

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We do not live in waters free of peril

“We do not live in waters free of peril” is published in the Spring 2011 issue of Diplomat and International Canada Magazine and is also available at

‘A Mari usque ad Mare’ is probably the only Latin phrase that Canadians understand. ‘From sea to sea’ is our national motto and it’s inscribed into our coat of arms. Someday, we’ll have to add another ‘to sea’ as the Northwest Passage becomes a commercial sea route through our Arctic waters.

HMCS Toronto  and CCGS PIerre Radisson in Frobisher Bay during Operation Nanook

Ours is the longest coastline in the world – enough to circle the equator six times. Always a sea-trading nation, we have become a nation of traders, with a record number of discussions underway to further trading opportunities with, for example, the European Union, China and India. The Seven Seas are global highways for 80 per cent of world commerce (valued at over 12.5 trillion dollars) but they are also inherently lawless.

Fortunately, first the Royal Navy and now the U.S. Navy have protected and policed the international sea-lanes, although U.S. budgetary pressures now mean that allies have to step up to the plate. As long-time beneficiaries and advocates of collective security we need to remind ourselves that ‘collective’ means a contribution commensurate with our vast real estate and waterfront. All of which underlines the requirement a strong Canadian Forces – Army, Air Force, and, in the wake of its centenary last year, our Navy.

Sustaining capacity is vital to sovereignty and this means both people and arms. Comparatively, we do defence on the cheap, spending a little over one percent of our GDP. The Americans, by contrast, spend about 5 percent and the British about 2 percent. We take justifiable pride in the quality of our contribution and the Canada First Defence Strategy combines both long-term planning and commitment to sustaining our Forces.

Planning for the next campaign is always difficult because threats change and can come from unexpected places. It puts a premium on having a diversity of tools to deal with different situations. Always controversial, because of the price tag, is the purchase of new ‘kit’. Increasingly, to meet the requirements of alliance interoperability, we design and buy collectively and then tailor to specific requirements, as we plan to do with the F-35. The new strike fighter is the aircraft of choice for our most of the alliance, including the US and the UK, as well as the Israelis who live in a dangerous neighbourhood and put a premium on defence.

HMSC Victoria in Halifax Harbour

Smart procurement also means buying second-hand. We bought our first ships, the Niobe and the Rainbow, from the British and we continue this tradition with our four Victoria class submarines. Submarines are the navy’s ‘special forces’ providing additional flexibility in conducting covert surveillance of our maritime approaches. As we learned during the Battle of the Atlantic, their lethalness permits them to dominate all aspects of maritime operations. A submarine at sea changes the calculations in an entire theatre of operations. In this decade, it is estimated that over one hundred new boats will be added to navies’ orders of battle. Most will be diesel-electric submarines like the Victoria class.

Later this year, the Victoria and Windsor will slip into our waters and begin patrol to defend Canadian sovereignty and contribute to collective security. Adapting our submarines to Canadian requirements has taken longer and cost more than expected but in underwater operation, there is no margin for error. The Chicoutimi tragedy underlines why we put a premium on quality. The emphasis on preparation saved the ship and all but one of its crew. We learn from the experience. Through incremental improvements, including a platform for the most advanced heavyweight torpedo available anywhere, we are developing a world-class technical niche. Eventually we should aim to make the submarines operable under our Arctic ice.

This technical challenge is a reminder of the often forgotten fourth arm of our armed services – research and development. It is supported by our defence industrial sector that if not forgotten is not always appreciated in terms of innovation and its contribution to our economic prosperity. Our defence industries employ over 90,000. We export about half of what we manufacture as part of supply chain dynamics that date back to the Second World War. The coming years will see major procurement projects ranging from satellites to ships and we now need develop a coherent industrial defence strategy to match our Forces Strategy.

The world is a dangerous place. Serious nations prepare accordingly and, as we learned long ago, Canadians do not live in a ‘fire-proof’ house or waters free of peril.

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Free trade is not a measly concept

Excertped from Neil Reynolds in the Globe and Mail, April 13, 2011 ‘Free trade is not a ‘measly’ concept’

The EU-Canada agreement may well extend a greater right for a Canadian to take a job in Europe than NAFTA does for a Canadian to take a job in the U.S. Writing in the March issue of Policy Options, former Canadian diplomat and trade expert Colin Robertson says Canada’s objectives in the coming “perimeter border” negotiations with the States should include extensive mobility rights: “The ultimate goal should be to make the flow of traffic – people, goods and services – within the single biggest bilateral trading relationship in the world as easy as that enjoyed within the European Union.”

Mr. Robertson says “rules and regulations,” as opposed to tariffs, now constitute the biggest barriers to the free movement of people and products in North America. (Orange juice, for example, is regarded as a drug in Canada but as a food product in the U.S.) Canada and the U.S. now make 5,000 changes to trade regulations every year – costing Canadian exporters $15-billion a year; more than 1 per cent of Canada’s GDP.

The Canada-U.S. FTA eliminated tariffs. Now it is time to get rid of the rules and regulations that succeeded them – whether doing so produces GDP gains or not: Simply put, it expands human liberty. Free-trade agreements, after all, are not free-trade agreements. They are managed-trade agreements. These legalistic, bureaucratic agreements nevertheless move peoples and nations closer to free trade – once eloquently anticipated by Frédéric Passy, the classical French economist who jointly won the first Nobel Peace Prize in 1901: “Some day, all [trade] barriers will fall,” he said. “Some day, mankind will form one workshop, one market, one family.”

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