Environment, Energy, Economy: US-Canada Trade Beyond the Keystone XL

On March 12, 2014, after a six-month delay, the United States Senate confirmed Bruce Heyman as the new American Ambassador to Canada, replacing David Jacobson. A lead fundraiser for Obama who had spent 33 years with Goldman Sachs, Obama appointed Heyman to this post of guardianship over the American-Canadian relationship. Once the senate confirmation was cleared, Heyman was sworn in by Vice President Joe Biden on March 26, 2014 and assumed his post on April 8, 2014. Although professedly pro-trade, the new Ambassador came bearing lukewarm news about one of the hottest topics in U.S.-Canada trade relations: the Keystone XL, now being pushed into its sixth year.

Prime Minister Stephen Harper meets American Ambassador Bruce Heyman. Photo by Deb Ransom.
Prime Minister Stephen Harper meets American Ambassador Bruce Heyman. (Photo by Deb Ransom)

In his first public comments, Heyman indicated that he and the Obama administration were on the same page, however he had “no news” other than to say that “the process is underway and a decision is forthcoming.”[1] In regard to a more praiseworthy silence, since arriving in Canada, Ambassador Heyman has passed what is being touted as his ‘first test’ by refusing to comment on the Québec election, citing it as a domestic issue. “I represent the United States in its relationship with Canada. I congratulate the victors and look very much forward to meeting the new premier, as well as all the premiers.”[2]

With domestic issues safely off the agenda and the Keystone XL likely to be punted again due to the U.S. midterm elections, what are the current trade-related issues Heyman has indicated are in his portfolio? The environment, the Detroit River International Crossing, and an assortment of trade irritants make the list.

#1. The Environment

Heyman has argued that it is currently possible to “be pro-economy and pro-energy and considerate of the environment. And we have to work together to accomplish a strong economy but we have to work together to protect the environment.”[3] In December, Prime Minister Stephen Harper had indicated a willingness to work with the United States on a regulatory regime that would cut emissions.[4] Former Conservative Prime Minister Mulroney has also publically added his voice to the discussion, urging bold leadership in the United States and Canada on both energy security and the environment. He spoke ambitiously of North America “setting a new gold standard on environmental performance.”[5] Mulroney further stated, “I can envisage a new North American Accord on Carbon Emissions, one that includes the spirit of what we did successfully together to combat acid rain and to clean up the Great Lakes, huge environmental achievements.”[6]

#2. Detroit River International Crossing

Approximately 28,814 trucks crossed the Ambassador Bridge in 2010, which is privately owned and the busiest border crossing in North America. As such, a second bridge has been proposed that would span the Detroit River, connecting Windsor, Ontario to Detroit, Michigan. However, while the Government of Canada and the Province of Ontario have moved forward with preparations for this crossing, including constructing a new $1.4-billion highway leading to the proposed crossing point in Windsor and acquiring land in Michigan, the United States has thus far failed to set aside the $250-million U.S. needed to construct the U.S. Customs plaza in Michigan.

A partner to the Ambassador Bridge is in the works. Photo by Nick Redhead.
A partner to the Ambassador Bridge is in the works. (Photo by Nick Redhead)

Amid some consternation in Canada due to this foot-dragging by the United States, former Canadian diplomat and current Vice President at the Canadian Defence and Foreign Affairs Institute, Colin Robertson, has suggested a solution. “If we’re thinking outside the box and more innovatively, and how we can save taxpayers money, why don’t we just have one plaza?” Robertson asked.[7] While this idea is not entirely without precedent for Canada and the U.S., there are some complexities that would need to be addressed, such as the issue of U.S. Border Guards carrying guns in Canada.

Ambassador Heyman has not responded to this idea in particular, but has stressed that this project is critical. Canadian Transport Minister, Lisa Raitt, echoes this sentiment. Heyman has reassured publically that there is not a particular holdup in the United States on this project; he reiterated: “Canada wants the bridge. I think we’d like to see the bridge. I think the issues are how to finance it, how to put it together.”[8] This is to be the topic of discussion between Ambassador Heyman and Transport Minister Lisa Raitt in coming months.

#3. From ‘Buy America’ to Oxycodone: Other Economic Barriers

Finally, there are a host of other issues that prevent the smooth and efficient flow of goods and services between Canada and the United States, despite NAFTA. One of these are various ‘Buy America’ policies that limit the purchase of iron, steel and manufactured non-U.S. products in transportation projects, including the aforementioned Detroit River International Crossing for which American logistics rely on Canadian funds. Additionally, the U.S. country-of-origin labeling program does not offer exemptions for its North American partners Canada and Mexico, which results in costly segregation of ‘foreign’ and domestic goods and livestock. Furthermore, recent U.S. tax legislation changes that enforce taxes on all U.S. citizens, a rather unique taxation method in the world, have forced Canadian depositors and borrowers to absorb significant compliance costs.

However, not all irritants to cross-border trade and collaboration stem from American legislation. The United States is pushing Canada to allow more dairy and poultry market access, as well as the adoption of stricter pharmaceutical intellectual property rights (on par with those in the Canada-E.U. Free Trade Agreement). These are issues that are directly related to the Trans-Pacific Partnership negotiations, which include both Canada and the United States. Finally, Canada is also undermining American counter-drug policies by producing a specific form of oxycodone that is banned in the United States. The drug is sweeping south through the border due to its legality and relative ease of accessibility in Canada. So while the Keystone XL may be on the back burner while the United States gets its political house in order, there are a plethora of very real and pressing issues to keep Ambassador Heyman and his Canadian counterpart rather busy.

For further reading about the issues that will affect US-Canada relations click here.

 

Featured Photo is a stock image that has been dedicated to the Public Domain.

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