Why we need to reset our relationship with the U.S.

by Colin Robertson

The Globe and Mail
November 10, 2015

It’s time to reset our relationship with the United States.

Three events last week set the stage for redefining the relationship.

First, Prime Minister Justin Trudeau re-established cabinet government. New ministers lead newly reminted departments with a very different approach to policies, notably on climate change.

Second, President Barack Obama rejected TransCanada’s Keystone XL permit application ending, for now, a seven-year odyssey that dominated and chilled relations between the Harper government and the Obama administration.

Third, coincident with the release of the Trans-Pacific Partnership agreement, China pipped Canada to become the United States’ largest trading partner.

These events set the stage for a strategic re-examination and reset of our continental relationships.

Looking to the Paris climate change conference at the end of the month and building on work already done by our energy ministers, we should find points of convergence with Mexico and the U.S. Why not a North American statement on trilateral climate policy co-operation?

On Keystone, Mr. Trudeau expressed “disappointment” but astutely observed that the U.S. relationship is “bigger than any one project”. He has acknowledged that the most important relationship for any prime minister is that with the U.S. President. Now he needs to act on it. The challenge is to find the leverage points, as Brian Mulroney did with Ronald Reagan on free trade and with George Bush on acid rain.

Start by having his principal secretary meet with the White House chief of staff. The relationship between chiefs of staff, as former Clinton chief-of-staff Leon Panetta once observed, is underutilized. Let them identify the opportunities and risks, convergences and divergences, recognizing that differences are normal but should never become personal.

For Mr. Harper and Mr. Obama, Keystone became personal. We should have recognized that for Mr. Obama, the environment is religion. He sees climate change as critical to his leadership and legacy. As he put it, “approving this project would have undercut that global leadership.”

There are ironies aplenty on Keystone. The U.S. has built the equivalent of 10 Keystone pipelines since 2010. More Canadian oil than ever goes south. We outpace OPEC with volumes over 50 per cent more than when the original pipeline permit was filed in 2008. A record 493,146 carloads travelled by train in 2014 despite the U.S. State Department acknowledgment that pipe is safer and its carbon footprint smaller. A higher percentage of Americans than Canadians favour the pipeline.

Calgary Mayor Naheed Nenshi got it right when he said “that one pipe, nearly a metre wide, is being asked to bear all the sins of the carbon economy.”

Rather than getting mad we need to be smarter in managing what will always be an asymmetrical relationship. It means that we must take the initiative, especially on economic issues.

For too long we hid behind the conceit that being the U.S. top trading partner gave us special privileges. It didn’t work. Now China occupies top spot and, eventually, Mexico will pass us.

The reality is that we account for just 15.5 per cent of U.S. trade while the U.S. accounts for 75 per cent of our trade. But with over 60 per cent of our GDP dependent on trade, the U.S. is our preponderant market and the easiest market for Canadian business to gain export confidence.

We need to up our game.

Prime Minister Trudeau’s first ask of President Obama should be to reinvigorate better border access for goods and people and accelerate regulatory co-operation. The Canada-U.S. cabinet committee should be renamed North America and focus on a continental competitiveness strategy. Canada is to host the next North American Leaders summit – to better prepare, delay this until the spring.

Given the critical role of states and provinces for trade and infrastructure, the next first ministers’ conference should focus on trade and getting our goods to market – continental, trans-Atlantic and trans-Pacific.

With everything we produce, when we only have one market we are price-takers, so finding new markets is vital.

Take softwood lumber. Like Halloween’s Freddy Krueger, it threatens again with the U.S. termination of the 2006 agreement. We have a year to work out a new deal. Appointing special envoys to find resolution, as we once did with fisheries and acid rain, would make sense.

Closer collaboration with Mexico is essential.

Despite U.S. perfidy, working together during the Trans-Pacific Partnership negotiations improved our auto deal. Staying united around retaliatory sanctions is the only way to persuade the U.S. Congress to pass remedial country-of-origin labelling legislation.

Pierre Trudeau once described living next to the United States “like sleeping with an elephant. No matter how friendly or temperate the beast, one is affected by every twitch and grunt.” As Justin Trudeau is now learning, managing the twitches and grunts is what defines a successful relationship with the U.S.

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