Canada must work hard to hold Obama's attention

Canadian concerns are hardly top of the agenda at the White House

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The Gazette, Wednesday, February 18, 2009

The asymmetrical nature of the Canada-U.S. relationship is perfectly illustrated by the media coverage of Barack Obama's visit to Canada tomorrow. In the Canadian media, there has been a frenzy of anticipation for weeks. In the United States, there has hardly been a mention.

Entire forests have died to provide advance coverage in Canadian newspapers, and the all-news channels are planning to cover tomorrow's working visit from touchdown to takeoff of Air Force One. But there was nothing about the impending visit in last Sunday's New York Times, and hardly any mention of it on the Sunday- morning talk shows. On NBC's flagship Meet the Press, Obama senior adviser David Axelrod did mention in passing that the U.S. president was "also going to Canada this week." It was about half a sentence in a 20-minute interview.

For the Canadian media, this is a very big deal, not just because he's a rock star, the hottest BlackBerry customer on the planet, but because it's his first visit as president to a foreign capital, and for Canada, there are bragging rights in that. For the U.S. media, it's interesting only as Obama's first trip. The fact that it happens to be to Canada is simply a question of the country providing the scenery for the shot.

For Canadian politicians and senior officials, it's equally an asymmetrical arrangement. They put so much time into the preparation of such a meeting because the relationship is so important to us, in every aspect of economic and foreign policy. To sit around the executive committee table of the Canadian Embassy in Washington, as I was privileged to do in the mid-1990s, is to understand that every important issue of Canadian public policy, from the economy and trade flows to Great Lakes water levels, from the environment to defence, goes through Washington. Although our embassy there is nominally just another post at Foreign Affairs, it functions like a central agency command post.

The arrival of a new president, particularly this president, is an opportunity to begin the relationship anew. But getting the attention of the Americans, then engaging them, is always another matter, because they have so much else to do. In Obama's case, it's not all about the economy, stupid, so much as about the stupid economy.

Just yesterday, Obama was in Denver signing the $800 billion rescue package passed by Congress last week, not to be confused with the more than $1-trillion bailout package for the failing U.S. financial services industry, nor with the bailout of Detroit. If you were to point out that Washington already nationalized the banking industry with a $700- billion bailout in the fall, and has already bailed out the American auto industry, you would be right. This is the situation Obama inherited, and the two recovery plans - Obama's and Stephen Harper's in the budget - make a good starting point for their conversation.

For example, Obama took note of Canadian and European objections, among others, to the Buy American provisions of the initial $880 billion in the first version adopted by the U.S. House of Representatives. In the final version they left in the requirements for infrastructure projects to use American iron and steel, while noting that the U.S. would have to meet its treaty obligations in trade, that is to say in the North American Free Trade Agreement and the World Trade Organization rules . In other words, Canadian access to U.S. markets is notionally protected by the covering language of the U.S. legislation, but as Harper has said, our officials will keep a close eye on it. A trade war over protectionist legislation is the last thing anyone wants in the worst financial and economic meltdown since the 1930s. You can look that up under, well, the 1930s.

Obama's recovery plan is proportionally much bigger than Harper's, in terms of deficit, stimulus and transfers to states, which are generally not allowed to run deficits.

That's because the U.S. is in a lot more trouble than Canada. Our banks are not failing, because their exposure to toxic assets was very limited. They own the investment banks, and run them like banks, not casinos. While American banks have fallen by the wayside, Canadian banks have grown in world ranking, as measured by assets under administration, just by surviving.

But there is a $200-billion standby credit provision in the budget, in case. Our housing sector is solid. And our fiscal framework is not comparable. While the U.S. was taking on $4 trillion of new debt under the Bush administration, Canada was paying down $100 billion of debt under successive Liberal and Conservative governments.

This year's U.S. deficit will be as much as $1.5 trillion, or nearly 10 per cent of GDP, while Canada's at a projected $34 billion, will be about 2 per cent of GDP.

It's the difference between bad management and good management, and while Canada can take some satisfaction from this, we can't be smug about it. The U.S. has become the company that is too important to be allowed to fail. So, welcome Mr. President, how can we help?

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