The border two-step

EVER since an unsuccessful attempt by the United States to conquer Canada in the war of 1812, Canadians have worried that Americans harbour ambitions to control, if not to own, their territory. This means that bilateral accords, of which there are some 698 on file, are jealously examined for their impact on Canadian sovereignty. The latest deal, called Beyond the Border and announced by Stephen Harper, Canada’s prime minister, and President Barack Obama in Washington on December 7th, will attract particular scrutiny, because it involves not just trade but the sensitive issue of shared security.

Mr Harper’s aim in seeking the deal was to dismantle at least some of the restrictions that have piled up at the border in the name of security since the terrorist attacks of September 11th 2001. The United States has agreed to do so if Canada meets its security concerns by providing more information on travellers, adopting US methods of baggage screening and exit controls, and harmonising a host of other security measures. A separate deal on regulations commits the two countries to work toward common standards on everything from food safety to locomotive emissions. “These agreements represent the most significant step forward in Canada-US co-operation since the North American Free-Trade Agreement (NAFTA),” says Mr Harper, whose goal was to protect Canada’s access to the American market.

Doing so is of great concern to Canadian business. Although the government is trying hard to find other markets, concluding a host of free-trade agreements with Latin American countries and negotiating broader economic pacts with the European Union and India, the United States remains by far Canada’s biggest trading partner, buying 73% of goods exported last year and supplying 63% of imports. Bilateral trade in goods and services totalled C$646 billion ($627 billion) in 2010. Yet this relationship has suffered recent blows, including the Buy American provisions in the jobs bill, a new fee for cross-border travel and the administration’s stalling on approval for the Keystone oil pipeline from Alberta to Texas.

But some aspects of Beyond the Border are controversial in Canada. That is especially true of passing on information about travellers. Even before the deal was announced, the New Democratic and Liberal parties pointed to concerns flagged by the privacy commissioner, an officer of Parliament, and accused the Conservative government of selling out to the Americans. The two governments say they will stay within the legal and privacy regimes of both countries and would develop joint privacy principles to guide their intelligence sharing.

There is also opposition to harmonising product and safety rules. “The prevailing view in Canada is that regulatory co-operation will erode our standards, which are generally considered to be higher than those of the United States,” the Conference Board, a business lobby, reported recently.

None of this is likely to derail the agreement in Canada. Mr Harper enjoys a parliamentary majority. Several prominent Liberals are now among the business cheerleaders for the deal. And anti-American feeling north of the border has recently subsided. Canadians like Mr Obama a lot more than they did his Republican predecessor, George Bush. They pity rather than envy Americans because of the higher unemployment rate and more depressed housing market south of the border.

The bigger question is whether Mr Obama can implement his end of the deal, given the other demands on his time and political capital during an election year. Although a large majority of Americans consider Canada to be a fair trader (a recent poll found 81% felt like this compared with 41% in relation to Mexico and 29% for China), they are generally unsympathetic to trade deals in today’s economically depressed climate. The nativist wing of the Republican Party opposes Beyond the Border, just as it did an earlier failed attempt to deepen NAFTA, which involves Mexico too. Despite being America’s largest trade partner and energy supplier, Canada has a low profile in Washington, except when it finds itself in the spotlight for the wrong reasons, such as being a source of so-called dirty oil from the Alberta tar sands.

Mr Harper is doing his best to hedge his bets. He has begun to cultivate various Asian countries, especially China. Snubbed by the United States over the Keystone pipeline, he made a point of telling China’s president that Canada is keen to supply more energy to Asia. But geography is still a big part of Canada’s destiny. Beyond the Border is important.

Origin
Source: Economist