Too Close to the USA

Canadians make much of something Pierre Trudeau said in a speech to the Washington Press Club in 1969: ‘Living next to you is in some ways like sleeping with an elephant. No matter how friendly and even-tempered the beast, one is affected by every twitch and grunt.’ Canada shares a continental market, the world’s longest undefended border, a language and increasingly a culture with the US, and seems, in recent decades, to have lost its ability to adopt a critical – or even guarded – view of its neighbour when developing and implementing its own foreign policy. Successive Canadian Governments, charged with managing an asymmetrical relationship from which there is no exit, have chosen to assume that the relationship is one between equals. But what if the decision-makers in Washington see things differently? What if, as far as they’re concerned, respect and equality are not part of the arrangement? What if their sole aim is the advancement of the American national interest, whatever the costs to Canada?

Over the next decade, a series of issues will test Canada’s assumptions about the benevolence of the United States. They include missile defence, global warming, energy and water exports, and control of the North-West Passage.

In 1983, Ronald Reagan launched the Strategic Defense Initiative (SDI), the aim of which was to develop the capacity to shoot down ballistic missiles launched at the US. Work on the project continued through subsequent Administrations, and now it seems that the necessary technology may soon be within reach. George W. Bush wants to push ahead with the scheme, and has committed the US to constructing a National Missile Defense system, at a cost of more than $60 billion. A successful test was carried out in July.

Canada’s co-operation is essential if the system is to be built. Any Russian, Chinese, North Korean or Iraqi missiles launched at the US would have to fly through thousands of kilometres of Canadian airspace. Moreover, they would have to be destroyed while still in Canadian airspace, which would in all likelihood mean that radar stations – and probably intercept launchers – would have to be built on Canadian soil. During the Cold War, Canada and the US co-operated closely in defending the continent against Russian bombers. Radar stations were built in northern Canada; American B-52s circled over the Arctic waiting for the signal to fly into the Soviet Union and drop their nuclear payloads. Together, the two countries still operate a string of automated radar stations and co-ordinate the North American Aerospace Defense Command, an organisation central to Bush’s missile defence plans.

Air defence co-operation was clearly in Canada’s interest; it is less obvious that the same could be said of a missile defence system. A new arms race between the United States, Russia and/or China would see Canada caught literally in the middle: by allowing missile defence installations to be built, it would make itself a target of any large-scale attack, although the ‘rogue states’ seen as the hypothetical justification for the scheme are unlikely to want to waste their few missiles on Vancouver or Toronto. Canadian taxpayers, meanwhile, would be asked to foot a substantial portion of the bill for missile defence – although the bulk of the jobs and profits would go to the United States.

Yet the Canadian Government appears poised to offer its full co-operation. Although the Defence Minister, Art Eggleton, insists that it is still too early to form an opinion, the Prime Minister, Jean Chrétien, has already said that the decision is for the US alone – despite the fact that Canada would clearly be involved. As things currently stand, however, the defection of the Republican Senator James Jeffords earlier this year may be enough to put the brakes on the project since it has given the Democrats, who are more sceptical about the whole idea, a majority on the Congressional committees that control military funding.

Canadian policy on climate change is similarly becalmed. Canada is the world’s second largest per capita emitter of greenhouse gases after the US. The reasons for this include a cold climate and a small population spread over a huge area, as well as a consumerist lifestyle heavily influenced by the States. Canadians appear to be more concerned than Americans about environmental issues, however, in part because of the attention the press there has given to the effects of acid rain on lakes and forests, and is now giving to the consequences of global warming for the Arctic, with its populations of polar bears and seals. There has been some domestic pressure to address the issue, and the Government recently announced that it will seek to reduce energy consumption by its own offices and employees to 30 per cent below 1990 levels within the next nine years.

Yet Canada has stood staunchly beside the US, sharing its preference for less stringent emission targets, greater reliance on market mechanisms and the inclusion of ‘carbon sinks’ in any multilateral agreement. When Bush pulled out of talks on the Kyoto Protocol, Canada stayed in and secured terms that are far worse for the environment that those offered by the Clinton Administration last autumn. This apparent schizophrenia results from the Government’s wish to sell more oil and gas to the US. Although the process of extracting these resources, especially from the tar sands of Alberta, generates large emissions that would count against carbon-production quotas, oil and gas exports inevitably boost the economy: Canada already exports more than $30 billion worth of energy annually to the US.

The US is far and away Canada’s largest export market, thanks to the continuing integration of the North American economy. The first step in this process was the Auto Pact of 1965, whereby the two countries established a free trade in cars and trucks, and shared production lines. In 1988, the Auto Pact was extended into a comprehensive free trade treaty, which was itself transformed into the North American Free Trade Agreement of 1994. As a result, bilateral trade increased and is now worth more than $1.2 billion a day. More than 75 per cent of Canadian exports go to the US, while Canada buys 23 per cent of American exports in return. It is now easier to export many goods from Canada to the States than it is to trade them internally between provinces. An ‘open skies’ agreement has also been concluded, eliminating most of the barriers to competition between Canadian and American airlines. Many of the consequences of this increased trade have been beneficial to Canada, helping to generate a standard of living that approaches – and an overall quality of life that may well exceed – that of the US. That said, several elements of Nafta have aroused considerable concern in Canada.

One is a temporary visa scheme that has encouraged many thousands of Canadian doctors, lawyers, nurses, teachers, computer scientists and other professionals to move to the US. Another is a mechanism which allows American, Mexican or Canadian companies investing in another Nafta country to obtain a binding dispute settlement if they believe their investments have been harmed by government action in that country. Indeed, the Canadian Government has backed away from several environmental protection initiatives because of their possible effects on US investments. Also worrying are provisions that prevent the Government from trying to reduce energy prices in Canada if the result would be that they would drop below the price of energy exports to the States. It is easy to imagine that a sovereign country, especially one that endures bitterly cold winters, might some day wish to cap prices on domestically consumed energy – the current energy crisis in California has convinced even the regulation-phobic Bush to allow the introduction of price controls there.

Yet Canadian Governments accepted all these conditions and now talk enthusiastically of increasing oil and gas exports without any apparent concern for the long-term environmental, economic or social costs. When Bush encountered opposition to his plans for drilling in the Alaska Wildlife Refuge, Chrétien promptly offered alternatives in Canada. Ralph Klein, the Premier of Canada’s leading oil-producing province, Alberta, recently told Dick Cheney that his province ‘had energy to burn’. The short-term benefits of increased energy exports are considerable, especially when world prices are high, and Canadian politicians are all too well aware of this. Swollen government revenue and job creation in the oil-fields will, they calculate, make for happy voters in the next round of federal and provincial elections, four years from now.

The US is also running short of fresh water. Aquifers in the South-West which contain water derived from wetter periods in the geological past, but which now receive little or no recharge from rain, are being exhausted as the population of the region increases dramatically. To have swimming pools, golf courses and irrigated vegetable farms in deserts does nothing for conservation. Today, neither the Colorado River nor the Rio Grande reaches the sea. Several private companies have long had plans to divert rivers from Canada to the United States, regardless of what Canada might have to say. Water has been transferred from Lake Michigan into the Chicago Sanitation Canal and onwards into the Mississippi River system ever since 1900. Some entrepreneurs would now like to extract even more, and to replenish the Great Lakes by building a dyke that would transform James Bay into an enormous freshwater reservoir, with nuclear-powered pumping stations to lift the water over the Canadian Shield. A second plan involves diverting the Mackenzie River – the Amazon of the north – into the Rocky Mountain Trench and so down to California. Although these grandiose plans are currently dormant, as attention focuses on the possible use of supertankers to transport water, they are likely to re-emerge soon. And it is clear that bulk water exports of any kind would have dramatic environmental consequences, as well as raising difficult questions of Canadian sovereignty.

Canadians are in fact extremely nationalistic when it comes to fresh water. Accordingly, it tends to be assumed that the Government would oppose the export of water and that the issue would turn on legal arguments. The worry has been that, since Nafta does not specifically exclude trade in water, allowing bulk exports would transform water into a ‘good’ under that agreement. If this happened, additional exports would then have to be permitted on a non-discriminatory basis.

More important, since Nafta does not prohibit measures that reduce trade restrictions, the Canadian government would face no legal impediment if it decided to allow water exports either on its own initiative or as the result of economic or political pressure from the US. And pressure from the US is building. One American water company has already invoked Nafta in a dispute with the Province of British Columbia over a permit to export water that was later revoked. Pressure is being exerted at government level as well: Bush recently indicated a desire to discuss large-scale water diversions with Chrétien. The Canadian Government, while denying that it has any intention of allowing exports, recently called for tenders to study the potential monetary value of the country’s fresh water resources. Plans, announced in 1999, to adopt legislation banning exports have not yet been implemented. Whether Canadians like it or not, their water will soon be up for sale.

Another imminent concern is control of the North-West Passage. The polar ice-cap is 40 per cent thinner than it was in the 1950s. The melting ice presents the US with a major opportunity. Its lease on the Panama Canal ran out in 1999, and the Canal is in any case too narrow for supertankers and aircraft carriers. An ice-free North-West Passage would provide a shorter and more secure route around North America, as well as giving easy access to the energy and other riches of Alaska and the Canadian north.

Canada’s long-standing claim to sovereignty over the Arctic islands and waters presents something of a problem, however, as do Canadian concerns about the environmental impact of oil shipments on the fragile northern ecosystem. The US insists that the North-West Passage is an international strait and therefore open to vessels from any country. This claim has been backed up with action, most recently in the summer of 1985 when a US Coastguard icebreaker made the passage without Canada’s permission. Once the ice melts sufficiently to make commercial shipping economically viable, the US will undoubtedly press its claim again. In response, the Canadian government will make a show of objecting, and then very likely concede. In Ottawa and elsewhere, there is already talk of an agreement that would see Canada surrender its claim to sovereignty so as to provide access to the Passage for everyone.

All countries feel the weight of American influence in their decision-making, but none – apart perhaps from Mexico and Cuba – feels it as heavily and as regularly as Canada. Retaining a distinct political and cultural identity in the shadow of their neighbour has both challenged and defined Canadians; and uncertainty as to whether their relationship with the US is really an equal one hasn’t helped.

Canada has been enormously successful in promoting changes at the international level, even if it has only sought to do so on issues not impinging on critical interests of the US. Whether the issue has been banning land-mines, or setting up an international criminal court, or outlawing certain organic pollutants, Canada has used its position as a middle power to advance its own interests and those of other countries. This capacity for leadership provides it with an enormous advantage vis-à-vis its southern neighbour, whose political and economic dominance, and tendency to use coercion rather than persuasion have reduced its ability to inspire trust or exert moral influence.

Canadians are not as far away from the rest of the world as they once were. Advances in transport and communications have dramatically reduced the cost and time involved in engaging with other countries, markets and cultures. One of the greatest ironies of Canada’s current relationship with the US is that more and more of its sovereignty is being ceded as an inevitable consequence of geographic proximity just as technology is bringing 190 other countries virtually to Canada’s doorstep.

Canada has much that the US and other countries want and need and has no need to sell out prematurely and on disadvantageous terms. What is required are politicians capable of looking beyond the current electoral cycle to take advantage of long-term negotiating strengths. And such politicians, although rare, are more likely to be found in a cohesive, social-welfare oriented society such as Canada than in the US. This does not require that Canada become anti-American. Americans are accustomed to and respect power politics. Benevolent beast or swaggering bully, the US would be better behaved if Canada stood up for itself more often.