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Get Four
|  | MARCH 9, 2005
By Paul Magnusson Time to Thaw U.S.-Canada Ties Canada is fighting Bush's proposed missile shield and smarting under a beef ban. Here's hoping a Texas confab will start mending the rift America's relations with its neighbor to the north have traditionally been pretty cordial. Canadians seemed to weather the loss of Dan Aykroyd, Joni Mitchell, and even hockey great Wayne Gretzky to U.S. celebritydom with characteristic aplomb. This year, Canadians may be unhappy that the National Hockey League has canceled its season, but they don't blame the U.S. for that either. Yet disputes over trade, the invasion of Iraq, and, most recently, President Bush's plan for an anti-ballistic missile shield over North America have made relations between the U.S. and Canada frostier than they've been in decades. In February, Secretary of State Condoleezza Rice abruptly canceled a trip to Canada. Then, a petulant President Bush refused to take a phone call from Canadian Prime Minister Paul Martin the first week of March. The subtext: Washington is miffed over Martin's Feb. 24 decision not to commit Canada to the missile defense grid. The system is still in the development stage and plagued with the sort of testing failures common to high-tech weapons. The U.S. wanted an agreement in principle for Canada's future involvement. COME ON DOWN. Even worse than Ottawa's refusal, though, was the fact that Martin's announcement took Bush by surprise -- a diplomatic insult on top of perceived injury. Coming after Canada's opposition to the American-led invasion of Iraq, the Administration felt compelled to publicly snub Martin. Before the situation worsens, both sides realize they should figure out a way to put the relationship back on track. Bush finally returned Martin's call Mar. 5, and he has invited Martin and Mexican President Vicente Fox to his Texas ranch on Mar. 23 for lunch. The occasion is a periodic meeting of the three nations of the North American Free Trade Agreement. But it may take more than a chat over beer and ribs for Bush to repair relations with America's largest trading partner. Feelings are still bruised over the missile flap, the latest in a long line of disputes over economic and social issues. After Bush sought Canada's help -- and potentially the use of its airspace -- for the missile-defense system, Canadians reacted to the idea as a needless escalation of the arms race and an affront to their sovereignty. Martin, a one-time supporter of the anti-missile system, was forced to abruptly switch his position. Polls had showed the public was overwhelmingly against the plan after Bush presented it in a speech in Halifax, Nova Scotia, in November. BENDING BOND. Tensions increased after Frank McKenna, Canada's new ambassador to the U.S., tied the Martin decision to smoldering resentment over Washington's seemingly high-handed trade actions. McKenna said the missile rejection "could be construed as a direct result" of mounting anger over U.S. restrictions on Canadian exports of lumber and beef. The hullabaloo made for another diplomatic gaffe: The two sides are supposed to pretend that trade policies are separate from strong military and diplomatic ties. Yet for the first time, concern about Canadian jobs seems to be trumping Ottawa's historic efforts to maintain a common stand with Washington against external security threats -- a bond that has held through two world wars, the cold war, and the fight against terrorism in Afghanistan. And it's here that Bush can offer an olive branch. Big money is at stake -- billions of U.S. dollars from lost Canadian beef sales. The U.S. market has been officially closed to Canadian live cattle exports since the discovery of a case of mad cow disease originating in Canada. In December, 2003, a single cow -- apparently raised in Canada and sold to a rancher in Washington State -- was discovered to have the brain-wasting disease, which can be passed on to humans. A ban on Canadian cattle exports went into effect that May. "STIGMA" ATTACHED? The Bush Administration had quietly eased the ban and was about to lift it entirely for cattle less than three-years-old when a federal court in Montana issued a stay, and the Senate voted Mar. 3 to overrule the Agriculture Dept. and keep the ban in place. U.S. cattle ranchers want to maintain the exclusion since the price of beef in the U.S. has risen during the ban. Even more important from their point of view is what might happen to sales of U.S. beef elsewhere in the world: Japan used the discovery of the single infected cow in Washington State to ban American beef imports Concluded U.S. District Court judge Richard Cebull in the Montana case: "Once the Canadian meat products are in the U.S., the stigma will attach to all U.S. meat." Canadians argue the U.S. ban is illegal since they use the same methods as the U.S. in testing for bovine spongiform encephalopathy, or BSE. ROOM TO MOVE. Another sore spot: Washington's determined refusal for decades to trade freely in softwood lumber, a commodity in which Canada enjoys a big price advantage. The U.S. has slapped $3.3 billion in tariffs against Canadian lumber since 2002, insisting that Ottawa's public-forest sales of wood to lumber companies gives Canuck companies an unfair advantage. The two sides have tried to negotiate a solution. But even though the U.S. lost preliminary rulings on the tariffs before NAFTA and World Trade Organization courts, it has refused to back down. Here, too, Bush has room to make a move. The solution boils down to this: Canada has more trees on cheaper land -- a classic comparative advantage. A negotiated settlement that recognizes this fact yet still discourages Canadian provinces from selling trees on public land at an unfair price shouldn't be too difficult. Something has to give. A report from American Assembly, a 40-year-old think-tank founded to examine relations between the two nations, concludes that "the warmth between Washington and Ottawa has dissipated." As further irritants, the group notes a growing gulf between Canada's tolerance for same-sex marriage, marijuana use, abortion, and gun control, and the aversion many Americans express toward those issues. NEIGHBORLY WOULD BE NICE. It also notes that with the end of the cold war, a strong unifying factor for the two nations is gone. Now, that has been replaced by multiple threats, including "long-term environmental degradation, climate change, lethal threats of global terrorism, and inadequate supervision of nuclear weapons." The U.S. and Canada may not be headed to the altar, but it's in their best interest to be friendly and helpful neighbors. Maybe that's what Bush has in mind for when he meets with Martin later this month at his ranch. It could be a starting point for negotiations.  Magnusson is a correspondent in BusinessWeek's Washington bureau Edited by Beth Belton Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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