I think I speak for all Canadians when I say how happy we are that President Obama's first foreign trip will be to Canada. This follows a pattern of US Presidents making Canada their first international trip. Four of the last seven Presidents did so, according to a Canadian Press story on the subject. We were pretty miffed when George W. Bush decided not to follow this tradition when he first became President 8 years ago. Of course, George W. had his reasons. The Chretien Liberals were in power at the time, and they were not, shall we say, overly enamoured with George W. Bush. George Bush knew that, of course, and went to Mexico.
But that is all water under the bridge. Chretien's Liberals are gone and so is George W. Bush. Canadian support for Obama was huge during the election. We seemed to love him even more than did the Americans - media polls apparently indicating that 80% of Canadians would have voted for him if given the chance. So it's great that he's coming here and I am sure we will be giddy when he arrives. CBC radio has even been putting together a playlist of 49 songs for Obama, songs which best "define" Canada - see http://www.cbc.ca/radio2/obamasplaylist/
Having said that, let's get down to business. Is Obama good for Canada? Now to be frank, this is a difficult question to answer. It is difficult, and I am trying to be polite here as one would expect from a Canadian host, because I am not sure where Obama stands on any precise issue on any precise day. There has been the tendency on the in-coming President's part to, let's say, be "flexible" on the issues. Concerns have been raised about his fluid positions on the public financing of campaigns, on the timeline for withdrawal from Iraq, on bans of hand guns, on immunity for telecom firms, on renegotiating NAFTA, on school voucher programs, and on welfare reform. Now I am not conversant with all of these issues, but it does seem to me that with respect to at least some of them, e.g. public financing of campaigns, principled positions clearly were changed for political expediency. But why quibble now? Obama won a convincing victory, will be the President on November 20, and is coming to Canada first. We are happy about that.
What's next for Canada? The big issues seem to be NAFTA, energy, and maybe sovereignty over the Arctic, something raised recently by George W. Bush. Will Obama try to renegotiate NAFTA? He said he would, but then someone in his campaign team said they were just throwing it out there for political gain in a tough primary contest, and they were not really serious. He did, however, talk very tough on protecting U.S. jobs and penalizing companies which send jobs "overseas", but Canada is of course not "overseas". But then he also talked about tearing down walls when he spoke in Europe, and declared himself to be a citizen of the world. So I really don't know what he will do. Will he build trade walls or tear them down? He wants to be energy self sufficient in 10 years, but then explained that this was about not buying oil from countries that don't like the US, and heck we love the USA now that Obama is President! So he cannot mean being free from our friendly oil, can he? But then he is big on climate change, and some say that our oil is "dirty" - another dilemma. I don't know what his position will be on our claim to sovereignty over the Arctic, but I say don't bring it up when he's here.
Then there's the relationship with Prime Minister Stephen Harper. On some matters I do not think things are promising there. Prime Minister Harper is a big George Bush type of guy when it comes down to Israel in particular and foreign policy in general. Harper supported the war in Iraq and would have probably sent Canadian troops had he been Prime Minister when George Bush asked for help. Obama's major claim to fame, on the other hand, was his opposition to the war in Iraq. Obama seems keen on changing the USA's "image" in the world, by being more "balanced" in his approaches to foreign policy. Harper, on the other hand, does not seem to care too much about Canada's image with countries whose policies and ideologies he opposes. We now see Canada not merely abstaining from UN resolutions condemning Israel, but actually sometimes standing alone in voting against such motions, as it did this week in a UN Human Rights Council resolution condemning Israel's actions in Gaza. Harper is a conservative, Obama is a liberal. So they have big differences.
On the positive side, at least in terms of their relationship, they are both strong family types, with firm religious beliefs. So they have something in common and can talk about that.
So who knows what's in store? Certainly not me. I do know however that President Obama is coming here first. And who can naysay that?
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I think that Obama has the opportunity, and hopefully the insight, to have his cake and eat it to, in this area at least. The US must do something about its trade imbalance. The recent levels are unsustainable. At the same time it (BoT) has not really been the result of free trade, and natural competitive advantages. The largest portion of the US trade deficit is from China. While a large portion is also from oil imports that is the result of circumstance not policy.
ReplyDeleteChina is a currency manipulator. The artificial Yuan pricing gives China a 40% (consensus) currency advantage. It also benefits from other mercantilist practices. From "The China Price Report";
Most of the remaining economic drivers of the China Price are clearly and overtly mercantilist. Export subsides account for 17% of the advantage, an undervalued currency adds 11%, and counterfeiting and piracy contribute 9%. Lax environmental and worker health and safety regulatory regimes add another 5%. Together, these mercantilist drivers account for fully 41% of the China Price advantage.
No amount of efficiency gains will make American (and by extension Canadian) producers competitive with such an environment.
Obama has an opportunity to addresses such manipulations while remaining a "Free Trade" supporter. Only because as it stands now, it is not free trade.