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Canada—US Relations: The Road Not Taken

An American who travels to Canada might be forgiven if he or she thought they had never left home. Canadians dress the same as Americans. Three quarters of them talk the same language. Apart from the cities being cleaner and in better repair, it looks like home. TV stations show the same fare—Seinfield, Jerry Springer, and the Movie-of-the-Week are all available along with your favorite soap operas. Magazine racks hold most of the same magazines. Theaters have the same blockbusters advertised on the marquees.

The similarities of the two cultures, however, can create a false sense of security when politics intrude. Shaped by many of the same environmental, social and political factors, Canada and the United States represent both common and different political traditions.

Canada is the other, less well—known, North American political model. For an American, Canada might be viewed as 'the road not taken'.

Often those divergent political cultures have been a significant factor in the conflicts that periodically develop between Canada and the United States.

After a hundred and thirty years of self-government, Canadians have developed their own diplomatic traditions and certain institutional arrangements and preferences for managing their public affairs. Many of these arrangements have bent more towards market mechanisms in recent years but they have not entirely succumbed. We are used to doing things in certain ways and many of these ways are different from how Americans order their public affairs. That means some conflicts of the past and some current conflicts will re—surface in one form or another in the future.

However, this is an argument that can be carried too far—and it frequently is!

Most conflicts between Canada and the US are commercially driven. Strip off the policy veneer and most conflicts are about money!

Often our respective political traditions are the public rationale for these private interests. The United States and Canada just happen to go about supporting their commercial interests in different ways.

The American way

US precipitated conflicts with Canada generally carry much less emotional baggage. The usual scenario is that a Canadian exporting interest has been successful in penetrating the US market and gaining market-share. This precipitates the affected US industry interest to agitate politically for some contingency action to restrict Canadian imports. If that interest has sufficient political muscle, the US government takes an action that often results in the negotiation of a voluntary restraint agreement. The Softwood Lumber Agreement between Canada and the US is a prime example.

The US follows this pattern with other trading partners whose export success elicits similar domestic opposition. While the US may dress up it actions in various political and policy justifications-usually the level of subterfuge is not very deep. It is all about how conflicts get settled in the US political system.

The US is the world's number one super power. It has a large, attractive market. If foreign competitors want access to this market, then they have to play by the local rules. Sometimes those rules get changed to benefit the home team.

In many respects, the US system is more accessible and open to negotiation than other large markets, which also have their own systems in place to protect their domestic commercial interests.

While Canadian companies complain about the heavy-handed US approach, they are good at adapting to the US system. Given the level of our mutual trade, the surprise may not be that Canada has voluntary restraints agreements with the US but that we have so few!

The Canadian way

Canada is no less prone to protecting its domestic companies from American competition but we go about it in different ways.

We are not a world super—power. We do not have a large market to leverage in the same fashion as the US or the EU.

Our preferred approach is to create a regulatory wall glued together by a slew of national policy justifications. Often these policy justifications are arguments about national sovereignty, regional development, our unique character, our administrative traditions, the need to protect Canadian culture and so on.

Sufficiently pressured, we may dismantle these walls but generally we negotiate the removal of each individual brick to buy time and wear down the other side.

For example, Canadians have a tremendous tolerance for protective arrangements. We have them in the telecommunications, liquor board practices, supply—managed agriculture, banking fields. In all these areas, commercial Canadian interests are embedded within supportive regulations.

Dealing with the Canadian method of protecting its commercial interests can be both confusing and frustrating for our trading partners. Often these regulatory 'walls' have real policy origins and objectives that actually do reflect some aspect of our 'different' political culture.

Our preference for protecting our commercial interests behind elaborate policy edifices leads some trading partners to see Canada as quite sanctimonious and hypocritical. However, in Canada's defense, it could be argued that small powers do not have the same options as big powers and, therefore, they must make the best use of the available weapons at hand.

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