With the U.S. administration now engaged in trade talks regarding the Trans-Pacific Partnership, and President Obama’s intention, expressed in his last State of Union address, to embark on a free trade arrangement with the European Union, it is clear that trade policy in the U.S. is in for a major shift. The Canada–U.S. commercial relationship, as we know it, will surely be in for a change. When you trade $1.5 billion of goods daily, neither country can remain indifferent if new commercial arrangements modify the status quo.
If we add to this the emerging energy revolution—related to shale gas and shale oil—that is bound to influence the U.S. economy, we can conclude that the U.S.’ major trading partners will soon face new challenges. It is becoming more apparent that the U.S. is heading toward energy self-sufficiency. By 2017, according to the International Energy Agency (IEA), the U.S. is expected to be the largest oil producer in the world. By 2020, it could be a net exporter of natural gas, and in 2030, the U.S. could be a net exporter of petroleum. This will have a direct impact on prices of those commodities, the cost of doing business and the potential growth of the U.S. manufacturing sector.
No one doubts the ingenuity and the innovative character of the U.S. economy. With a competitive advantage sparked by this new energy picture, one can conclude that the American economy may be in for important, positive and significant growth. Despite the uncertainty often associated with its domestic politics regarding deficit and debt issues, the U.S. economy is certain to be gradually transformed. The current Canada–U.S. commercial relationship, which is the largest in the world, will also be directly affected. Canada cannot afford to ignore what this new American challenge represents for its own future.
For Canada, this will require an even greater effort to diversify and pursue more aggressively new or alternative markets. It will also have to engage in more research and development, aim for greater productivity, attract more immigrants, and invest in greater manpower training. With our energy, our multiple natural resources , and our competitive high-tech sectors, Canada has already engaged with moderate success in diversifying its markets.
President Obama’s Inaugural Address and State of the Union speech have one thing in common. The emphasis is on jobs and America is changing. Its demographics clearly showed that the electoral map favors the party that is more attuned to minorities, women’s rights and the youth. Its social fabric is being tested regarding gay marriage, gun control restrictions and the possible legalization of marijuana. The economic picture is transforming itself as the U.S. sees energy self sufficiency on the horizon as it actively searches for expanded markets for exporting its goods. Finally, the interminable debate around the debt and annual deficits will go a long way in defining the role of government for future generations.
Canadians observe the U.S. political landscape with interest, and sometimes, with bewilderment. They see the Democrat and Republican parties stuck in political gridlock, and conclude that America still holds to a status quo that is out of tune with new realities. Yet, this is far from accurate, suffice it to say that America has made great strides in many areas that affect our lives north of the border. We must take note.
Canada and the United States form the largest commercial partnership on the planet. And while trade flows have generally stagnated in the decade since 9/11, Canada still sends more exports to the U.S. than any other country (over 70 percent). My home province of Québec sent 68 percent of its exports to the U.S. in 2011; in the state of New York alone, we exported $7 billion of goods compared to $2.4 billion in China, $1.5 billion to Germany and $1.4 billion to France.
Last week, Prime Minister Stephen Harper interrupted his trip to India to offer President Barack Obama his congratulations on his reelection. In Canada, there had been talk that Conservative Prime Minister Harper may have preferred a more ideologically-similar partner like Mitt Romney to govern our closest political neighbor and ally and strongest commercial partner.
But anyone who knows Canadian-American relations and history should know that interests and interpersonal relationships play a greater role than ideological kinship.
To his credit, Harper, who won a minority government victory a month before Obama's win in 2008, sent a clear signal that his approach to U.S. relations would be pragmatic and sensitive to the president-elect's interests and agenda. The appointment of NDP Premier Gary Doer as Canada's ambassador to Washington in 2009 had all the makings of Harper's desire for a smooth and operational relationship. He was not wrong: Doer has shown aplomb and pragmatism while gaining access, which is so critical and crucial for a functional partnership.
Just recently, I listened to a PBS documentary entitled Looking for Lincoln. It was very revealing to witness how America evolved from the time of slavery to the race relations of today. We observed how a constitution is a living document and how leaders and moments of leadership can converge to advance a society and reinforce a nation’s character.
In democratic nations, we benefit from differences and divergent views. Whether living under the principles of the U.S. Constitution or a parliamentary system like in Canada, we grow stronger from the heated moments of passion to the cool resolution of an issue. In recent months, political debate has heated up and some have gone so far as to question the health of the American political system.
Americans will soon begin the final stretch of the mid-term electoral season. As I recently discussed in other posts, political observers, pundits and partisan operatives have been weighing in about the polarization of U.S. politics, the ideological divide, the strong anti-incumbent sentiment, and how “dysfunctional” the system is.
To an outsider listening in, you would think that American democracy is in its death throes. But, as a Quebecer living in New York, my take is that the last few weeks have shown quite the opposite. The debates remain as lively as ever, but very much in conformity with the values of the American political system and its constitutional precepts.