US-Canada Rift over Iraq Could Hurt Canadian Businesses
Alison Appelbe
Correspondent
Vancouver, B.C. (CNSNews.com) - When U.S. Ambassador to Canada Paul Cellucci publicly criticized Canada's Liberal government recently for refusing to join the war on Iraq, he also alluded to concerns in the Canadian business community that the government's decision could end up harming trade with the U.S. Agricultural, steel and lumber trade could all be hurt, according to analysts.
In a widely reported speech to the Economic Club of Canada in Toronto, Cellucci accused the Jean Chretien government of abandoning America at a time of need. His wording suggested that Canada was behaving dishonorably.
"There is no security threat to Canada that the United States would not be ready, willing and able to help with," Cellucci said. "There would be no debate. There would be no hesitation. We would be there for Canada, part of our family. And that is why so many in the United States are disappointed and upset that Canada is not fully supporting us now."
In a series of inconsistent remarks in recent weeks, Prime Minister Chretien has not only refused to offer the U.S. military help, but he has also withheld a promise of "moral" support. In response to Cellucci's remarks, Chretien argued in the House of Commons: "Being independent and sovereign nations, we can disagree and remain good friends."
Cellucci, in his speech, alluded to Canada's massive dependence on U.S. trade and its relative lack of interest in border security and military spending. "For Canada, the priority is trade; for us, the priority is security," he said. "Security trumps trade." Cellucci went on to say that while the U.S. would not retaliate against Canada, in the long run, Canada's position could affect diplomatic and economic relations.
Praising Cellucci's remarks as "right on target," University of Calgary political scientist Barry Cooper said that although the speech came "late in the day" - likely after diplomatic channels had been exhausted - it will have an impact.
"People sitting on the fence will question the wisdom of the government position. Supporters will be emboldened," Cooper added.
Jason Clemens, director of fiscal studies at the Vancouver-based Fraser Institute, a research organization, echoed Cellucci's remarks: "While America looks at the security front, Canada looks at the U.S. as a marketplace - and the free ride may be coming to an end."
A National Post newspaper editorial Wednesday stated that despite his careful wording, Cellucci "is clearly signaling that the United States is fed up with Canada."
A recent Financial Post poll conducted by Compas, Inc., showed that 57 percent of 138 business leaders in small to large corporations across the country believe the federal government's position will harm Canadian companies doing business with the U.S. The vast majority also felt "strongly" or "somewhat strongly" that Canadian exports to the U.S. would be slowed or stopped as a result of the political fallout.
The sector most likely to be affected is auto manufacturing. A slower movement of auto parts at major U.S.-Canada border points could limit production at plants in southern Ontario, affecting Canada's heartland economy, Cooper pointed out.
Clemens also described the possible "long-lasting repercussions for Canadian industry and [the] standard of living.
"Forty percent of our trade is tied to the U.S. Even with a 10 percent slowdown in (cross-border) traffic, we would take a massive hit," Clemens said.
However, two U.S. automakers with proposals to build additional plants in Canada, Ford and DaimlerChrysler, said it was unlikely Canada's position on the war will affect their cost analyses and decisions.
The only provincial premier to break ranks with the federal government on its Iraq decision was Ralph Klein of Alberta - a major supplier of oil and natural gas to the U.S.
When Klein, a Conservative, publicly thanked President George W. Bush for his actions, he received a rebuke from Chretien. At the same time, Chretien permitted several Liberal members of parliament, including Natural Resources Minister Herb Dhaliwal, to openly criticize Bush and the U.S. government.
In his speech, Cellucci made clear he was displeased with the double standard. "When Mr. Klein issues strong support for the United States, the Canadian government comes down hard on him," he said. "When Mr. Dhaliwal makes totally inappropriate remarks about the president of the United States, they kind of ignore it."
Cooper said that by challenging federal policy, Klein was consolidating support in Alberta - a province with strong U.S. ties - and raising the province's profile nationally. He also noted that the U.S. is so dependent on Alberta gas and oil that the energy sector is unlikely to be affected by Canada-U.S. differences.
Still, the entrenched dispute over softwood lumber trade will be worsened by differences over the war in Iraq, Clemens said. "Basic logic suggests that had we done what we should have done, both American trade representatives and members of Congress would be much more receptive to finding a mutually beneficial resolution," he said.
Clemens added that agriculture, particularly wheat sales, and steel manufacturing could also be negatively affected. In 2002, Canadian companies shipped $236 billion worth of exports to the U.S. An estimated 30,000 trucks cross the border each day.
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