Canada

Dancing with the elephant next door

The cabinet takes up the American challenge

Bruce Wallace July 12 1999
Canada

Dancing with the elephant next door

The cabinet takes up the American challenge

Bruce Wallace July 12 1999

Dancing with the elephant next door

The cabinet takes up the American challenge

Perhaps all that was needed to give a boost to the sorry fortunes of the Canadian dollar was to speculate that the time had come to dump it. A week after talk of a currency union with the United States seeped out of academia and onto Ottawa’s summer barbecue circuit, the loonie actually found itself up almost two-thirds of a cent against the American dollar. The chatter about the loonies eventual death certainly tantalized those Canadians who look longingly south, wondering how to keep up with the continental Joneses. Only Jean Chrétien was having none of it. “This is not on the agenda,” said the Prime Minister as he gavelled open a two-day, closed-door cabinet retreat in Ottawa. Chrétien was so wary of having ministers batting the idea of currency union around his cabinet table, he repeated the warning at the end of the session.

Not on the agenda, but always on the mind. No Canadian cabinet can afford to blissfully plunk its head in the sand when it comes to things American. Even last week’s tiny surge in the loonie was essentially a case of piggybacking on unexpectedly good American economic news. “Eighty-five per cent of our trade takes place with them,” Chrétien told reporters after the meeting. “What would be surprising is if we were not interested in our relationship with the United States.” In fact, Ottawa has become jittery about the across-the-fence friendship in recent months. Strains are popping up, from threatened trade wars to American restrictions on hi-tech trade because of Washington’s allegation that Ca-

nada is lax with sensitive information.

But if Chrétiens intention at the cabinet retreat was to discover ways to improve bilateral trading relations, advisers say he heard more from those increasingly unsetded ministers on the Liberal left who are anxious about any further American infringement on Canadian sovereignty. The recent deal with Washington to allow greater American access to the magazine market was a bruising experience for the Liberals. Some ministers and a restless caucus saw the final deal as a thinly veiled surrender of domestic cultural policy. For them, the issue is whether Ottawa has the willingness to use the protections still afforded it under its trade agreements. Do you use those rights, asks the Liberal left? Or do you fold your

tent the first time the Americans bark?

For the official Opposition, any sign of a reinvigorated Liberal left is all too predictable. “Scratch a Liberal and you find the free trader on the outside is still a protectionist inside,” says Reform MP Jason Kenney. “The Liberals have been mugged by reality, and I’m sure some regret and resent that.” But those realities are not about to abate. One pressing one: find a solution to the threatened decamping of Canada’s small-market hockey franchises to U.S. cities, where teams are seduced by sweeter tax treatment— and revenues in American dollars. The Liberals are clearly anxious to avoid having any more Canadian teams pull up stakes on their watch. But are they comfortable providing tax breaks or large subsidies to an industry populated by highly visible young millionaires? Last week saw them offering to pony up $ 15 million a year for Canada’s six teams if the provinces, players and league contributed similar amounts.

So the issue of how to retain sovereignty in a world rushing to tear down barriers remains at the heart of how to govern, the meridian around which all Chrétien ministers are positioned. “We’ve been together a long time now and pretty well know where we all stand,” Fisheries Minister David Anderson said with a laugh after last week’s meeting. The solution to dealing with the Americans, he said, does not lie in sticking to either ideology of protectionism or globalization. “We’re up against so enormous a presence that I liken it to being Greeks in the Roman empire,” he says. “You’ve got to be smarter, you’ve got to be quicker, you’ve got to be a little better educated.” Canadians will watch, then, to see just how nimble the Liberals can be.

Bruce Wallace