The Pivotal Partnership: Opportunities & Challenges in US-Canada Relations

The opportunities and challenges presented by the powerful partnership of the US and Canada were the focus of the Forum presentation facilitated by Graham G. Dodds from Concordia University and Christopher Sands of Johns Hopkins University.

The US-Canada border is the longest in the world, spanning 5,525 miles across 13 US states and 8 Canadian Provinces/Territories. The border supports a $576 billion (2015) annual trade relationship between Canada and the US-the largest bilateral trade relationship in the world. Over 5 million commercial trucks cross the US-Canada border each year carrying more than $300 billion (2015) in goods. In addition, about 400,000 individuals cross the border each day.

Canadian Demographics and Economy

Dr. Dodds contrasted the similarities and differences between the countries, noting that Canada’s land mass is 1.6% larger than that of the US; however, Canada’s population is just 35 million people vs. 319 million in the US; and the US population is younger, has a higher birth rate, is more ethnically diverse, and has far more immigrants. Canada has significantly higher taxes and government regulations have a larger footprint, Dr. Dodds commented, putting Canada in 14th place in the world for “ease of doing business,” while the US is seventh.

 Canada compared to the US

Canadian Politics

Politically, federalism is stronger in Canada, with the provinces having more authority than the US states. Canada also has “equalization payments,” which transfer wealth from the richer to the poorer provinces. Canada also is more liberal than the US, with 56% supporting Prime Minister Justin Trudeau. If Canadians voted in US elections, they would vote 3:1 for Democrats, Dr. Dodds said. Canada has 4 major parties with federal elections in October, 2016. In Canada, the parties choose the candidates, rather than selection by popular vote. The leaders of the parties determine who, where, and when people will be allowed to run. In the US system, the President must persuade Congress to agree to his or her plans while the Canadian parliamentary system gives the majority in Parliament more power to act.

Canadian Perceptions of US Politics

Politically, Canadians follow US politics closely. Today, 67% fear a Trump presidency, perceiving him as “Brash, crass, uninformed, and profoundly impolite (considered a major faux pas in Canada), Mr. Trump feeds anti-American stereotypes,” Dr. Dodds observed. Canadians fear a tighter border policy and threats to NAFTA if Mr. Trump were to be elected. With 400,000 people and $2.5 billion in goods and services crossing the US-Canada border every day, this represents a significant threat.

Canadians perceive the US Congress as having a significant impact on cross-border trade and security. In the decade from 2000-2010, there were 18,000 mentions of Canada in the US Congress, or one every other day, Dr. Dodds reported. Canadians may support Democrats or Republicans, depending on the issue; however, Canadians believe that both US parties recognize the importance of Canada as a defense partner and an ally on the global stage.

Unresolved Border Issues

According to Dr. Dodds, the key border disputes confronting the US and Canada concern:

1. The Beaufort Sea oil and gas reserves

2. The Northwest Passage – as global warming reduces the polar ice blockage and opens a faster route between Europe and Asia

 

3. The Great Lakes, which provide drinking water to 33 million people

4. Fresh water exports from Canada and NAFTA regulations

5. Soft wood lumber trade agreements

6. The Keystone Pipeline, which could re-emerge as an issue when oil prices rise

 

The Pivotal Partnership: Opportunities & Challenges in US-Canada Relations

Dr. Christopher Sands, Johns Hopkins University, took a deeper dive into the US-Canada relationship, focusing on topics that included President Barack Obama’s legacy in Canada, US perceptions of Canada, the role of decentralization in Canada, and predictions for the future of the US-Canadian relationship.

President Obama’s Legacy in Canada

President Obama is perceived positively by Canadians--mostly. When the 2008 financial crisis led to the American Recovery Act (ARA) with its slogan “Buy American,” he ensured that the ARA was consistent with international agreements, including NAFTA, which allowed “North American” content in products. This consideration was essential for the major cross-border exchanges in automobiles and airplanes, engines and parts, and other high-tech instruments. Materials move back and forth across the border, being made where the expertise and cost are best, and then transported for “just in time” delivery to facilities performing the next step in manufacturing or assembly. President Obama ensured that this exchange would continue. In 2009, this policy paid off when the US and Canada made bilateral commitments to help automobile manufacturers survive.

President Obama also was instrumental in bringing Canada and Mexico into the Trans-Pacific Partnership, which would provide an economic lift for Canada as well as offer an opportunity to update the now 22-year-old NAFTA agreement. The Obama Administration also concurred with Canadians who sought a bilateral discussion to create a northern border strategy rather than a trilateral discussion that included Mexico in the mix, noting that the northern border issues and trade relationships differed significantly from the southern issues.

The US benefited from Canada’s inclusion in President Obama’s “coalition of the willing,” in the fight against ISIS. Initially, Canada provided fighter aircraft, and now continues to support training for anti-ISIS forces.

Given these positive experiences and perceptions of President Obama, Canadians felt he slandered and abandoned them when he issued the Presidential veto of the Keystone Pipeline. Canadians felt they were denied due process, especially as energy is one of the biggest growth sectors in Canada.

Despite this lapse in popularity, President Obama and Canadian Prime Minister Justin Trudeau are very friendly and have put the US-Canada relationship on a positive track, Dr. Sands pointed out. Mr. Trudeau has asserted his voice in the American dialogue, responding to US domestic events such as the Orlando shootings with compassion and concern.

The Columbus Declaration

Dr. Sands reported his experience at the recently concluded inaugural meeting of the US-Canada Summit–Strategies, Advocacy, Gateways, Engagement (S.A.G.E.) at The Ohio State University. The so-called Ohio Consortium includes stakeholders from corporations, non-governmental organizations (NGOs) and mayors to provide a local perspective and to drive federal action on important issues in the US-Canada relationship that relate to commerce, information-sharing, and partnership opportunities.

Based on Core Principles of friendship, interdependence, partnership among co-equal sovereignties, respect for the rule of law, support for innovation and a high-value economy, and recognizing labor mobility and the need for harmonizing credentials, the Consortium developed an actionable set of deliverables agreed to by business, policy, and political delegates representing the leading 60 Canada-US organizations.

The “Columbus Declaration” calls on the respective governments to:

Provide clarity and necessary training regarding business visitor rules between the two countries

Advance the PreClearance “border” bills pending in the US Congress and Parliament of Canada to strengthen border security and facilitate trade

Eliminate redundant regulations and achieve alignment where possible

In conclusion, Dr. Sands pointed out that Canadians want the US to be successful and to continue to grow as a market for Canadian goods and services, thus strengthening North America as a single market.

Discussion

Sen. Brian Bingman (OK): What is Canada’s alternate plan for transporting oil to the refineries if the Keystone Pipeline cannot be built?

Dr. Sands: Canada has great resources, but they are expensive to develop. Exporting oil to the US makes oil an affordable export. Alternate plans include pipeline-to-pipeline connections such as a new pipeline connecting Alberta to the Northern Gateway pipeline; a proposed Vancouver-to-Washington pipeline could triple exports but also makes Vancouver Bay vulnerable and increases the requirement for Coast Guard support; a third alternative envisions Energy East Pipeline, the 4,600-kilometre (xxxx miles) pipeline that could carry 1.1-million barrels of crude oil per day from Alberta and Saskatchewan to to the New Brunswick refinery.

Canada oil is heavy grade (like that from Venezuela and Mexico) and Canada wants to get its oil to the Texas refineries where there is capacity and infrastructure for shipping. Canadians continue to hope the Keystone Pipeline will be built, or that a pipeline to the US West Coast will allow Canadian crude to reach California’s refineries.

Sen. Eduardo Bhatia (PR): Mr. Trudeau is engaging in deficit spending. In the US, people get very concerned about deficits, while Canadians seems relaxed about it. What is happening?

Dr. Dodds: Former Prime Minister Stephen Harper was a fiscal conservative who made deep and unpopular cuts in spending. Canadians are tired of austerity. Mr. Trudeau is motivated by domestic politics to say “enough cuts, a little debt is OK.” The people anticipate that the economy will grow and the deficit will be reduced.

Dr. Sands: The Wall Street Journal called Canada “a Banana Republic,” based on the fact that Canada’s combined federal and provincial net debt has increased from $834 billion in 2007/08 to a projected $1.3 trillion in 2015/16, representing 64.8% of the economy. The Provinces are responsible for spending on healthcare, infrastructure, and pensions. When former Prime Minister Harper slashed funding to the provinces, it corrected the fiscal situation for the bond markets but caused significant local pain. There is still room for Canada to spend before the international financial markets become concerned.

Sen. David Long (IN): What is the future of the Northwest Passage?  Russia and China are both interested. And significant mineral rights also are on the table.

Dr. Dodds: Who owns the Arctic? Where are the territorial boundaries? These are the current issues. Canada claims the channels between its Arctic islands that connect the Atlantic Ocean to the Beaufort Sea north of Alaska are the country’s “internal waters.” The US maintains that the waterway is an “international strait” through which ships and aircraft from all countries have a right of uninterrupted “transit passage.”

Canada’s motto has been “From Sea to Sea,” but now Canadians are saying “From Sea, To Sea, To Sea.” Canada can bolster its claims by building more infrastructure in the area. However, increasing vessel traffic multiplies the risk of accidents and the need to provide more Coast Guard support.

Dr. Sands: US National Security Presidential Directive (NSPD) # 66 recognizes that the US is an Arctic nation with compelling interests in the region and asserts that the US exercises authority in accordance with lawful claims of its sovereignty in the Arctic region, in the US economic zone and on the continental shelf, and US contiguous zone. However, NSPD 66 also states that freedom of the seas is a top national priority. The US will provide support for marine security in the region, until the Canadians are able to provide it. The US is a committed advocate for the Arctic; however, with the price of oil and gas so low, private sector stakeholders are less interested.

US National Security Presidential Directive (NSPD) # 66 states that the Arctic Region Policy of the US is intended to:

1. Meet national security and homeland security needs relevant to the Arctic region;

2. Protect the Arctic environment and conserve its resources;

3. Ensure that natural resource management and economic development in the region are environmentally sustainable;

4. Strengthen institutions for cooperation among the eight Arctic nations (the United States/Canada/Denmark/Finland/Iceland/Norway/the Russian Federation/Sweden)

5. Involve the Arctic's indigenous communities in decisions that affect them; and

6. Enhance scientific monitoring and research into local, regional, and global environmental issues.

Sen. John Cullerton (IL): What are the relationships between the French-speaking and the English-speaking people in Quebec? Do their attitudes toward the US differ?

Dr. Sands: Canada is so very large that Canadians who live on the border may relate more to their US neighbors than to other Canadians. The people of Quebec love the US. There are many exchanges and very popular shopping trips to the US.  The gracious Montreal folk are very welcoming to Americans.

Sen. Wayne Niederhauser (UT): Federalism seems stronger in Canada than the US. In the US power is more centralized and this can be a corrupting, unhealthy influence. How does decentralized decision-making in the Provinces work in Canada? The Provinces are funded by transfers from the central government, but the Provinces decide on allocations. Are there strings attached to the funding?

Dr. Dodds: The Constitution favors the power of the Provinces over the central government. The Provinces also have more responsibilities than the US states do. There are few strings attached to the funding they receive and no mandates. The federal government in Canada does not impose its views on the Provinces, there is little country-wide regulation such as the US Securities Exchange Commission, except for Criminal Law, which is uniform across Canada.

Dr. Sands: The purpose of federalism is to allow local entities to be autonomous – not to be dictated by a central government. When the Canadian colonies formed the Dominion in 1867, the US Civil War was just over, and Canadians wanted to avoid having such a horrific conflict. Therefore, section 91 of the Constitution specifically defined the powers of the federal government and Section 92 detailed the powers of provincial authorities. In the 1920s, some powers changed as federal social programs were created and federal taxes were increased to fund them. But funding is provided to the provinces as block grants, with no strings attached.

Sen. Brent Hill (ID): What are the criteria for Canadian “equalization payments?” Are they objective criteria or is it political? Who gives and who receives?

Dr. Sands: It is a very political process. The Province of Ontario with 40% of the population and 50% of the GDP is the bell weather, the standard against which the other Provinces are measured. There is a constitutional equalization formula, which ensures the same level of government services in all the provinces. This allows some creative local innovation; for example, to provide health-care services in remote areas, rather than building expensive clinics, the Provinces may buy small planes to transport patients to established medical centers.

Sen. John Alario (LA): The Tax Freedom Day is so different in the US (April 24) versus Canada (June 7). Why is it so disparate?

Dr. Dodds: Canada has many taxes, there are federal, provincial and sales taxes that tally up to about 13%. The Province of Quebec’s taxes are especially high because there is more government and more services. But the services are very good. The tuition to attend an excellent university is about $3,000 per year.

Dr. Sands: Many more sectors are government controlled in Canada than the US and have no private sector involvement. For example, doctors and university professors are civil servants as all medical clinics, hospitals, and universities are government-funded.

Sen. Mark Norris (TN): It seems it is very hard to move to Canada. Why is that?

Dr. Dodds: The Provinces control immigration; so any applicant must be approved first by the Province and then by the federal government.

Sen. Troy Frazer (TX): Have the economics of the Keystone Pipeline changed due to the fall in the price of oil or is it the result of President Obama’s rejection of the Pipeline?

Dr. Sands: The fall in oil price is the key driver. Energy and natural resources are 31% of Canada’s GDP. That sector is driven by the global market. The break-even price for extracting oil from the tar sands is $40-$45 per barrel. The companies have already built out the infrastructure in anticipation of the Keystone Pipeline, they may be able to work profitably even with today’s low prices.

Speaker Biography

Graham G. Dodds

Professor Graham Dodds is an expert on United States politics and law. He holds degrees from Penn, Columbia, and UC-Irvine and has worked as a Research Fellow at the Brookings Institution and as a Legislative Assistant for a member of the U.S. House of Representatives.

Research

Much of Professor Dodds’s research concerns American political development, especially the U.S. presidency. His book Take Up Your Pen examines the evolution of unilateral presidential directives such as executive orders. He has published numerous journal articles and book chapters on the presidency, the press, political culture, constitutionalism, political theory, and the use of governmental apologies for political reconciliation, among other topics. He is currently working on a book manuscript about the U.S. president’s use of mass pardons or amnesties, provisionally entitled Talk the Walk: Presidential Pardons and the Rhetoric of Reconciliation.

Teaching

Professor Dodds is an award-winning teacher and often conducts workshops for other professors on how to be a better teacher. At the graduate level, he teaches a seminar on political leadership and decision-making. At the undergraduate level, he teaches a survey of western political theory, an introduction to U.S. politics, and advanced seminars on a wide variety of topics in U.S. politics and law. He taught previously at Penn and the Institut d'études politiques in Grenoble, France.

Media

Professor Dodds has been interviewed by journalists in major news outlets hundreds of times. To arrange an interview, please contact Concordia’s Media Relations office.

Christopher Sands

Christopher Sands is Senior Research Professor and Director of the Center for Canadian Studies at Johns Hopkins University's Paul H. Nitze School of Advanced International Studies. He is concurrently the G. Robert Ross Distinguished Visiting Professor of Canada-U.S. Business and Economic Relations in the College of Business and Economics at Western Washington University. From 2005 until 2012, he taught in the School of Public Affairs and the School of International Service at American University.

Dr. Sands worked for more than twenty-two years in Washington DC think tanks, starting in 1993 as Canada Project Coordinator at the Center for Strategic and International Studies (CSIS). At CSIS, Sands served as Director of the CSIS Canada Project from 1995 until 2006, leading the CSIS Congressional Study Group on Canada and chairing the CSIS Smart Border North Working Group. Sands research considered the impact of the North American Free Trade Agreement, the 1995 Quebec Referendum and the September 11, 2001 terrorist attacks on U.S.-Canadian Relations. Today, Dr. Sands is a Senior Associate at CSIS, advising the scholars of the Americas Program on North American issues. From 2007 until 2016, he was a Senior Fellow of the Hudson Institute where he directed the Hudson Initiative on North American Competitiveness. At Hudson, Sands led studies of the Security and Prosperity Partnership of North America, alternative energy futures for North America, and automotive industrial policy in the wake of the 2009 U.S. and Canadian bailouts of General Motors and Chrysler. In addition to CSIS and Hudson, Sands’ work has been published by several of Washington's leading think tanks, including the American Enterprise Institute, the Atlantic Council, the Brookings Institution, the Center for the Study of the Presidency, the Migration Policy Institute and the Woodrow Wilson International Center for Scholars. Dr. Sands is a fellow of the Border Policy Research Institute in Bellingham, Washington and serves on the advisory boards for the Macdonald Laurier Institute in Ottawa and for the Canada-United States Law Institute (a joint venture of the law faculties of Case Western Reserve University in Cleveland, Ohio and Western University in London, Ontario).

From 2002 until 2007, Dr. Sands served as Director for Strategic Planning and Program Evaluation at the International Republican Institute, a core institute of the U.S. National Endowment for Democracy. In this capacity he conducted research, trainings and field evaluations of IRI programs in Africa, Asia, Europe, Latin America and the Middle East. He was an IRI representative for the Community of Democracies, the World Movement for Democracy, and the World Forum for Democracy in Asia and testified before the Canadian House of Commons Standing Committee on Foreign Affairs and International Trade on democracy assistance and Canadian foreign policy. Since leaving IRI, he has continued his work on democracy assistance as a consultant to the National Endowment for Democracy and the Freedom Collection of the George W. Bush Presidential Library. Since 2007, he has also served on the board of iSolon,org, a research and advocacy institute based in Maryland committed to democratic reforms in the United States, Canada and around the world focusing primarily on constitutional reforms, transparency in democratic processes, and electoral integrity.

Professor Sands began teaching at SAIS as a professorial lecturer in 2009. He earned a B.A. degree in political science at Macalester College in St. Paul, Minnesota, and an M.A. in international economics and Canadian studies from Johns Hopkins University SAIS. The title of his doctoral dissertation, also at Johns Hopkins University SAIS, was “Forging the Detroit Consensus: The Relative Power Cycle and the Political Economy of the North American Automotive Trade Regime”. During the 1999-2000 academic year, he was a Fulbright scholar at the Norman Paterson School of International Affairs at Carleton University in Ottawa. He serves on the executive (as treasurer) of the Canadian Politics Section of the American Political Science Association, and is a member of the International Studies Association and the Association for Canadian Studies in the United States.

Other Summer 2016 Forum Highlights articles:

Graham G. Dodds

Associate Professor

Department of Political Science

Concordia University

The US-Canada border is
the longest in the world, spanning 5,525 miles across 13 US states and 8 Canadian Provinces/Territories. The border supports a $576 billion (2015) annual trade relationship between Canada and the US-the largest bilateral trade relationship in the world. Over 5 million commercial trucks cross the US-Canada border each year carrying more than $300 billion (2015) in goods. In addition, about 400,000 individuals cross the border each day.

Christopher Sands

Senior Research Professor and Director of the Center for Canadian Studies

Johns Hopkins University's Paul H. Nitze School of Advanced International Studies

Materials move back and forth across the border, being made where the expertise and cost are best, and then transported for “just in time” delivery to facilities performing the next step in manufacturing or assembly. President Obama ensured that this exchange would continue.

The “Columbus Declaration” calls on the respective governments to:

• Provide clarity and necessary training regarding business visitor rules between the two countries

• Advance the PreClearance “border” bills pending in the US Congress and Parliament of Canada to strengthen border security and facilitate trade

• Eliminate redundant regulations and achieve alignment where possible

Eduardo Bhatia

Sen. David Long

US National Security Presidential Directive (NSPD) # 66 states that the Arctic Region Policy of the US is intended to:

1. Meet national security and homeland security needs relevant to the Arctic region;

2. Protect the Arctic environment and conserve its resources;

3. Ensure that natural resource management and economic development in the region are environmentally sustainable;

4. Strengthen institutions for cooperation among the eight Arctic nations (the United States/Canada/Denmark/Finland/Iceland/Norway/the Russian Federation/Sweden)

5. Involve the Arctic's indigenous communities in decisions that affect them; and

6. Enhance scientific monitoring and research into local, regional, and global environmental issues.

Sen. John Cullerton

Sen. Wayne Niederhauser

Graham G. Dodds

Christopher Sands

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