Friday, June 9

Carlo Dade: Biden’s visit to Canada may mark beginning of long decline in relationship with US

Gains from Biden’s visit should not be treated as a victory

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Reviews and analysis of United States President Joe Biden’s visit to Ottawa have been overwhelmingly positive, which is correct, but only if the framework for analysis is the immediate term. For the mid to longer term, the visit may mark the start of the decline of the relationship between the countries.

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Several items heralded as major Canadian victories may do more damage to the relationship in the longer term. Two that stand out are gaining greater access to US Inflation Reduction Act spending and avoiding US requests that Canada take the lead on Haiti.

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First, on Haiti, Canada scored a victory by not getting dragged into carrying water for the United States to stabilize the country. Even though desperately needed, any boots-on-the-ground mission in Haiti would be a no-end-in- sight and thankless commitment with only political pain and no gain. It is also an untenable domestic political position for any Canadian government and also something that Canada simply lacks the resources to accomplish.

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But while the US government and political class might understand the political unwillingness behind Canada’s refusal, it is the physical inability to help that will linger in American minds. Afghanistan is long in the rear-view mirror, and as the United States looks to major challenges Ahead, the question now looms as to whether Canada can be called on to assist. Canada may be a reliable partner, but is it even capable of taking on the challenges that now preoccupy the United States?

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Increasing funding for the North American Areospace Defense Command (NORAD) seems, in the face of a lack of capacity to contribute elsewhere, to be the least Canada can do. But is money all that Canada can offer? And even with financing commitments, will Canada actually spend what has been proposed, or is this just an announcement with the hope that money will actually be spent? Is there support for this sort of spending in Canada from the Bloc Québécois and New Democratic Party upon whom the Liberal government depends to remain in power? These questions, no doubt running through American minds, also raise concerns over what sort of ally Canada will be. Here, there are reasons for doubt.

On the Inflation Reduction Act, promises by President Biden to ease access to US taxpayer money were welcome news for Canadian businesses and politicians. The flip side of winning this access is that it enables Canadian firms to help make the US more competitive in, among others things, moving goods to market. Canada’s trade infrastructure rankings, a measure of confidence in its ability to move goods to market, have fallen from the top 10 a decade ago to 32nd place today.

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While it’s true that the Americans’ ranking also dropped, it was only to spot 13. And they still responded with massive investments. Canada has not. Yet, rather than pushing the Canadian federal government to spend serious money on trade infrastructure to make Canada more competitive, Canadian business has lobbied for access to the US IRA. This will make the United States, one of Canada’s biggest competitors for exports to places like the Indo-Pacific, even more competitive. In the short-term, access to easy American money makes sense. In the longer term, it will cost us.

Of course, the Americans do not see any of this as Canada helping US competitiveness. There are plenty of US companies that can do whatever work is needed. They see this win for Canada as a loss for the US Worse, Americans see us as a country that refuses to fund its own infrastructure development while complaining also about not having access to US taxpayer money to build in that country. As a dual Canadian-US citizen, the American in me does not have to imagine how all this plays in the US mind.

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Our current fight to integrate further into the US economy does not seem to be winning friends in that country, even when we are helping to make the United states more competitive. Plus, it appears to be weakening Canada. Maintaining access to the US market is , of course, essential. But serious productivity and competitiveness challenges at home will not be resolved by making further economic integration in the United States the focus of our economic ambitions.

The gains from the Biden visit are good news — in the short term. But they should be treated not as a victory, but as a reprieve and a space to begin serious domestic economic and military reforms.

Carlo Dade, is director of the Trade and Investment Center at the Canada West Foundation.


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