WORLD

Northern exposure

WARREN CARAGATA November 21 1994
WORLD

Northern exposure

WARREN CARAGATA November 21 1994

Northern exposure

There are some things in life that Canadians cannot escape-snow in winter, rain on weekends and the certainty that whatever happens in the United States will have an effect north of the border. So while it seemed last week that the entire Canadian government had decamped to China, there was still considerable attention being paid to the results of the U.S. midterm elections that divided power between Bill Clinton’s Democrat White House and resurgent Republicans in Congress. And, although it is far too early to predict the full impact of the election on U.S.-Canada relations, most experts say that the effects will likely be felt first in commercial dealings between the two countries. “It’s going to get murkier on the trade front,” said Jack Granatstein, a historian at Toronto’s York University and an expert on CanadianAmerican relations.

The reason for that has less to do with the differences between Republicans and Democrats than with the nature of U.S. politics. Historically, most of the pressure for protectionism has come from Congress, whose members represent the interests of particular regions. The president, on the other hand, can generally afford to take a broader

view—and, as a result, often favors freer trade. The problem for Canada, says trade consultant Gordon Ritchie, who helped negotiate the Canada-U.S. Free Trade Agreement, is that the Republican surge in

Congress has undermined the power of the White House. Adds Ritchie: “We need the U.S. market, the Congress controls that market, and Congress in turn is controlled by the special interests.”

Many of the irritants in Canada-U.S. commerce arise from trade in resources—softwood lumber, dumm wheat, fish—and resource-rich states have tremendous power in Congress. As of January, that power will be wielded by Republicans like Bob Dole of Kansas, an ally of the farm lobby and the likely new Senate majority leader. The threat of renewed American protectionism worries Art Macklin, a Grande Prairie, Alta., farmer and president of the National Farmers Union. “There are many Canadian agricultural products that are extremely vulnerable to protectionist pressures,” he said, arguing that the election results seemed to reflect a “me-first kind of mood.”

Last week’s vote could also have more direct economic consequences. Allan Fordyce, an economist at the Royal Bank, says that pressure has been building recently in the United States for higher interest rates to dampen inflation. With the election out of the way, the Federal Reserve may decide that the time is right to raise rates. That would likely

prompt the Bank of Canada to follow suit.

Prime Minister Jean Chrétien will be able to form his own impressions of the changing U.S. political climate when he meets Clinton in Indonesia at the Asia-Pacific summit this week. He may not like what he sees and hears about the new dynamic in Washington. While Clinton was not a candidate in the elections, he was the principal victim, his power to direct American domestic and foreign policy hobbled by a politically hostile Congress. And powerful presidents are often appreciated by prime ministers because Canada traditionally deals with the United States through the administration. Says historian Granatstein: “A weak president in a situation where he is in real trouble with Congress—that is not to our interests.”

WARREN CARAGATA in Ottawa