ISSUES IN INTERNATIONAL
POLITICAL ECONOMY
APRIL 2003, NUMBER 40
Strains in the Canada-U.S. Relationship
Sidney Weintraub
It has been hard in recent months to keep up with Canadian
commentary on relations with the United States because there
has been so much of it. Much of the discussion revolves
around the optimum techniques to deal with the joint terrorist
threat while doing minimal damage to the movement of
goods, services, and people—and this commentary is
unexceptionable, indeed constructive. Other writings deal
with Canadian concerns that their views are given short shrift
by leading U.S. policy makers and consist of suggestions on
how to overcome this neglect. Again, this is useful as ideas
are publicly debated. Finally, much writing is a mixture of
explanations and attacks on the Canadian government’s
decision not to support the U.S. position on Iraq, and many
of these declarations raise fears of possible U.S. retaliatory
actions, especially in economic relations. This sort of
bilateral tension is not new—it existed during the years
1968–1979 and 1980–1984 when Pierre Trudeau was prime
minister. It is troublesome, nonetheless, because there are
hardly any other two countries—and maybe none—that have
been such fortunate neighbors.
The Canadian concern that security trumps trade arose after
September 11, 2001, when Canadian trucks bearing goods
experienced delays crossing the border. More than 45,000
trucks cross the border each day and much of what they carry
is destined for use almost immediately in U.S. manufacturing
facilities. The just-in-time industrial production is quite
advanced, especially in the automotive industry on opposite
sides of the bridge between Windsor, Ontario, and Detroit,
Michigan, and delays and unpredictability can be highly
disruptive. Much of this trade is intra-firm or between related
companies and, if the movement of production inputs from
Canada is not reliable, there is no reason why the Canadian
facilities cannot be moved a few miles south into the United
States.
Handling the security-trade mix at the border is a highly
cooperative venture, based on the “smart border” accord of
December 2001, being implemented under the direction of
Deputy Prime Minister John Manley and Secretary of
Homeland Security Tom Ridge. For the moment, the twin
imperatives of security and trade are working efficiently, but
the techniques put in place would be jeopardized if there
were a successful terrorist incident that circumvented the
border safeguards or involved terrorists moving across the
border. This is why the Canadian Council of Chief
Executives (CCCE) recommended reinventing the notion of
border, that is, setting up a common security perimeter for
the two countries. Governor Pataki of New York and Premier
Ernie Eves of Toronto made the same suggestion.
The notion of perimeter screening to speed up the movement
of goods and residents of the two countries is logical on the
surface, but there are inherent problems that must be
considered. Without any border screening, the two countries
would need identical immigration laws to permit the free
movement of people from one country to the other and a
common tariff and other trade restrictions so that the
transshipment of goods from one country to the other would
not matter. These steps smack of sharing sovereignty rather
than “mutual respect for sovereignty,” which is an essential
element of the CCCE proposal. Sharing sovereignty is not
necessarily a bad idea, but is not what the CCCE advocates.
A common security perimeter for Canada and the United
States would omit Mexico, unless there was a common North
American perimeter—something that would multiply
ancillary complications many times over.
U.S. policy makers might not neglect Canada, some
Canadians have suggested, if some “big ideas” were adopted,
as phrased by Allan Gotlieb, a well-known personality in
Canada and a former ambassador to the United States. The
big idea of transforming the free trade area that exists
between Canada and the United States into a customs union
(i.e., having a common external tariff) was suggested in a
study written by Wendy Dobson for Canada’s C.D. Howe
Institute. Having a common perimeter would be a much
bigger idea because, in my judgment, this would necessarily
William E. Simon Chair in Political Economy • Center for Strategic and International Studies
1800 K Street, N.W. • Washington, D.C. 20006 • Tel: (202) 775-3292 • Fax: (202) 775-3199 • www.csis.org
require both a common tariff and free movement of people.
A Canada-U.S. customs union would complicate North
American unity under NAFTA because the U.S.-Mexican
relationship would continue to be one of free trade without a
common tariff. Mexico would be reluctant to enter into a
North American customs union because this would require
terminating its free trade agreement with the European
Union.
There is probably much truth to Canada’s perception that its
views are largely neglected in the United States. In other
words, the relationship is seen largely in the United States as
one of trade and investment and not much more. The big idea
stimulated by this situation is that Canada build up its
defense posture for the common defense of North America.
Canada has done just the opposite in recent years; it has built
down its military and devoted the resources to social issues
and budgetary balance instead. The CCCE has stated that
Canada must make a vastly more effective contribution to the
defense and security of the North American homeland. Jack
Granatstein, a Canadian historian, has said that, “whether
Canadians realize it or not, Canada is now all but
undefended.” The choice to focus on social and economic
issues may be a reasonable one, but it does have its
consequences. Canada, in this sense, is now much like
Mexico—an important neighbor with which there is much
trade but which does not contribute much to the common
defense. Under these circumstances, it is not surprising that
Canada’s voice on national security issues does not have
much resonance. It is mere opinion with few resources to
back it up.
The bilateral relationship was severely strained by Canada’s
decision not to support the U.S. position in Iraq. Canada, of
course, was not unique, but as two Canadian scholars (Bill
Dymond and Michael Hart) have written, Canada by its
action removed its name from the list of countries that can be
counted as reliable partners and principled U.S. allies.
Canadian authorities make a number of points to soften the
perception that Canada does not contribute to the common
defense. They point out that Canadian frigates and aircraft
patrol the Persian Gulf to assure maritime passage; that
Canada will be sending 2,000 new troops to help in security
stability in Afghanistan; and, in March, Canada announced a
$100 million humanitarian aid package for the Iraqi people.
speech under instructions from Washington. In my view, this
was a most unwise speech.
Trade issues are central to the relationship. About 85 percent
of Canada’s exports go to the United States, and they
constitute more than 35 percent of Canada’s GDP. About 70
percent of the trade is either intra-firm or between related
parties in the two countries so that any restrictions would
immediately affect U.S. as well as Canadian companies. The
amount of merchandise that now moves between the two
countries is more than U.S.$1.2 billion a day. It is hard to
exaggerate the implications of imposing trade restrictions for
the two countries, and it is not an overstatement to assert that
even an implied threat by the United States to take such steps
is madness. I assume therefore that it will not happen, except
for marginal actions by small producers and traders.
Canadian columnist Jeffrey Simpson has written that the
tension that exists in Canada about its interests and instincts
with respect to the United States is greater than at any time
since World War II. As Simpson put it, Canada’s instincts
are those of continental Europe, and its interests are aligned
with those of the United States. Foreign policy, he argued, is
about instincts, and economics is about interests. Although
these tensions have long existed in Canada, they are now
being pushed to their limit. It is time, therefore, for both
nations to cool their rhetoric, which is what Ambassador
Celucci’s second speech was intended to do. The relationship
is too important and too valuable for both countries to let it
slip into lasting resentments.
Issues in International Political Economy is published by
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international public policy issues. Its research is
nonpartisan and nonproprietary. CSIS does not take
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and conclusions expressed in this publication should be
understood to be solely those of the author.
© 2003 by the Center for Strategic and International
Studies.
In late March, U.S. ambassador to Canada Paul Celluci stated
in a speech that the United States was disappointed that
Canada was not doing enough in the war. A week later, he
adopted a softer tone and stated that the economic ties
between the two countries are too deep to be interrupted for
any period of time. The implication of the first speech was
that there might be trade punishment against Canada by the
United States; the second speech implied that this would not
take place. Celucci also suggested that he made his first
William E. Simon Chair in Political Economy • Center for Strategic and International Studies
1800 K Street, N.W. • Washington, D.C. 20006 • Tel: (202) 775-3292 • Fax: (202) 775-3199 • www.csis.org