https://declassified.library.utoronto.ca/files/original/2192d959f220899aad29d34a8a4e6ed7.pdf c85580678107b3986a1cd8353b431d80 PDF Text Text Document disclosed under the Access to Information Act Document divulgue en vertu de la Loi sur I'acces a I'inforeflation From: Sent: To: Co: Subject: CONFIDENTIAL (CEO) FURTADO Francis -WSHDC -GR -C4 December 4,2002 11:13AM -EXTOTT -MML -C4 -EXTOTT -USS -C4; -EXTOTT -DMT -C4; -EXTOTT -DMA -C4; EXTOTT -MDM -C4; -EXTOTT -MJW -C4; -EXTOTT,-MDW -C4; EXTOTT -MJM -C4; -EXTOTT -CPP -C4; -EXTOTT -CPD -C4; EXTOTT -NAD -C4; -EXTOTT -IDD -C4; -EXTOTT -NUR -C4; EXTOTT -NUE -C4; -EXTOTT -NUB -C4; -EXTOTT -EAD -C4; EXTOTT -EAI-C4; -EXTOTT -EAT -C4; -EXTOTT -EAR -C4; EXTOTT -EPS -C4; -EXTOTT -IMD -C4; -EXTOTT -IMO -C4; EXTOTT -ISD -C4; -EXTOTT -ISI-C4; -EXTOTT -IDR -C4; -EXTOTT IDC -C4; -EXTOTT -IDA -C4; -EXTOTT -GMR -C4; -EXTOTT -GMD C4; -NDHQ OTT ADM (POL) -C4; -NDHQ OTT DG POL PLAN -C4; NDHQ OTT DGISPOL -C4; -NDHQ OTT D POL DEV -C4; -NDHQ OTT DWH POL -C4; -NDHQ OTT D Cabinet Ln -C4; Privy Council Office -C4R; Privy Council Office I Foreign & Defence Policy -C4R; BFALO -SFAX DE OTT; -CHCGO -SFAX DE OTT; -DALAS -SFAX DE OTT; -DTROT -SFAX DE OTT; -LNGLS -SFAX DE OTT; -MIAMI SFAX DE OTT; -MNPLS -SFAX DE OTT; -CNGNY -SFAX DE OTT; SEATL -SFAX DE OTT; -PRMOAS -HOM -C4; -PRMOAS -C4; KERGIN Michael -WSHDC -HOM -C4; COTE Berlin -WSHDC D/HOM -CDM/A -C4; BOEHM Peter -WSHDC -GR -C4; FORTIER Patricia -WSHDC -GR -C4; -WSHDC -CDLS(W) -DR -C4; -WSHDC EC -C4; -WSHDC -IM -C4; -WSHDC -PA -C4; -WSHDC -PL -C4; WSHDC -TD -C4; -WSHDC -GR -C4; CCATS UNGR0341: Canada-US Relations - Background Material DND: Please pass to DM/Bloodworth/Vigneault, Assoc. DM/Purdy PCO: Please pass to Assoc. Clerk/Bilodeau, Ops/Fonberg, Borders Task Force/Flack/Wiebe We have attached some background material on Canada-US relations that was prepared in advance of Ambassador Kergin's presentation to Cabinet on November 19th. CDA-US.1page.wpd Drafted/Consulted: Approved: CDA-US.text.wpd Embassy sections P. Fortier 000057 �Document disclosed under the Access to Information Act Document divulgue en vertu de la Loisur I'acces a /’information CANADA-US RELATIONS - OVERVIEW The mid-term Congressional elections were a triumph for the Republicans, underwritten by ongoing concerns about security, coupled with the voter’s endorsement of George Bush as a wartime leader. • The results reflect the lasting impact of September 11th on the US psyche. The US is a country already at war, and may be about to expand the conflict to Iraq. • At home, a far-reaching sense of insecurity pervades the US body politic, and the Administration is about to proceed with the most significant changes to US government since the Second World War to address this threat. • As far as Canada-US relations is concerned, Secretary Powell’s visit to Ottawa was encouraging in that it reflected a US desire to engage Canada, and resulted in usefully clarifying both sides’ understanding of key issues. • Nevertheless, the prevailing environment in the US dominated by the campaign against terrorism abroad and sweeping measures to strengthen security at home stands to challenge long-standing assumptions that have governed the way in which we manage our relationship with the US, both in North America and in terms of our approach to international issues. • The US no longer automatically factors allied concerns into its decisions simply because they are traditional allies. Influential allies will be those which self-select. We can choose to partner with them ^or not, but they will take note of our decisions. Our decisions on Iraq stand to shape US perceptions of ^Canada as a dependable ally. • At home, the US focus on homeland security has major implications for the border, and each country’s each country’s conception of the border may be diverging. For us, it is about preserving access for Canadians as well as Canadian goods, services, and investment. For the US, it is about ensuring security from the potential threats that come with access. • The prospect of the US taking action across a wide variety of sectors (immigration, law enforcement, defence) to support the strategic goal of strengthening homeland security could have far-reaching implications for Canada. Considered of itself, each US initiative might look like an incremental change in a discrete area. However, the initiatives will be part of a broader agenda, the cumulative effect of which could recast our personality as a North American country. • In the area of trade and energy policy, the advent of the 108th Congress may provide reasons for guarded optimism, allowing for the fact that our terms of reference are the outgoing 107th Congress. We should not expect the Administration or Congress to reverse itself on major environmental issues (Kyoto, the Arctic National Wildlife Refuge), but we may see progress taken at the local level and, to a lesser extent, by private enterprise. • Managing the operational aspects of the bilateral relationship in the post-election environment will require us to stay out in front of the issues, define our objectives, s.15(1) 000058 �Document disclosed under the Access to Information Act Document divulgue en vertu de la Loi sur I'acces a /'information CONTEXT The political scene. The mid-term Congressional elections were a triumph for the Republicans, underwritten by ongoing concerns about security, coupled with the voter’s endorsement of George Bush as a wartime leader. Although the Republicans do not have a completely free hand with the social and economic aspects of their agenda, Americans have united behind Bush and the Republicans on security, which remains the dominant political issue. The election results were a remarkable achievement for the Republicans. Yes, voter turnout remained low (39%), and after the most expensive congressional election in US history (approximately $1 billion), less than two percent of the seats to be contested in the House, and 15 percent in the Senate, changed hands. Nevertheless, for the first time in over 100 years, the party of an incumbent Administration regained control of the Senate. The Republican win is all the more remarkable given the economic downturn, and financial scandals that have prompted questions about important aspects of the US economy - particularly in the area of corporate governance. Against this backdrop, the election clearly demonstrated the considerable political strengths of President Bush who made an exceptional effort -- in terms of time and fund-raising - on behalf of Republican candidates. In the electoral game, the Democrats chose not only the wrong plays (absenting themselves from the debate on Iraq), but the wrong game plan, by highlighting issues, (the economy or the future of social programs) where there was little in the way of policy to distinguish them from the Republicans. Policy Issues: Security First The elections underscored the abiding importance of security — domestic and international - on the US political scene. This is the issue that the Republicans on which the Republicans won, and one that will remain a key focus for at least the next two years. It is also the prism through which the country at large has come to view many issues. International security. Sometimes, it is strangely easy to forget this, but the US is at war. Its military personnel are engaged in ongoing operations in Afghanistan, other parts of South Asia, and the Hom of Africa, and Iraq may be next. All of this has produced a wartime mentality that is often lost on other countries. Eighteen months ago, it would have been fashionable to say that the US was ‘unilateralist’ - quite willing to impose its will on the world. Since then, the US has demonstrated a willingness to work with other countries. They have done this bilaterally (with various partners in the campaign in Afghanistan) and multilaterally (as evidenced by a 15-0 vote on the question of Iraq at the UN Security Council). All of this is encouraging, but we should bear in mind that the Administration (supported by sentiment in Congress and the public at large) continues to the evaluate the international response to current issues very carefully. Who is with us? Who isn’t? 000059 �Document disclosed under the Access to Information Act Document divulgu# en vertu de la Loi sur I'acc&s a I'information Iraq will bring this way of looking at the world to the forefront. The US (led, within the US government, by Colin Powell) worked hard to gain a UN Security Council resolution that makes clear Iraq’s obligation to divest itself of any weapons of mass destruction, or face the prospect of being disarmed by force. The US regards us not only as a potential ally in this campaign, but as one of the countries that urged it to work for a UN resolution. So they are looking to us to support them, whether the resolution brings about the peaceful disarmament of Iraq or not. At the end of the day, our decisions on Iraq may have a significant impact on US perceptions of Canada as a dependable ally. Defence. The US is on a campaign to get all of its allies to spend more on defence. This may be less a matter of specific dollar figures (although more money is always nice) than the level of useful military capability that the US can count on allies to field. The US will be watching for indications that we will make the investments that will enable us to continue to play our historic role in international security. The new focus on homeland security has also raised the salience of Canadian geography as potential avenue of attack against the US - so the US will want us to be a reliable partner there too. Missile defence is the other major bilateral defence issue on the horizon. Although the deployment of a system is several years away, planning is underway now, and decisions on command and control are not far off. If we want to influence the development of a system that will have the potential to defend Canadian territory, the time is drawing near for us to indicate our interest in participation. Domestic security. Quite apart from the memory of September 11th and the possibility of war with Iraq, the ensuing anthrax scares, periodic security alerts, heightened security at all ports of entry, and the sniper attacks in Washington have produced a situation where domestic security has become a prominent, pervasive influence on the US agenda. With the creation of the Department of Homeland Security and Northern Command, the US government is poised to embark on the most significant reorganization of itself since the end of the Second World War. With the founding legislation of the DHS now signed into law - and the resources there for the asking - the DHS stands to become a juggernaut that will sweep a lot of other interests, national and bilateral, aside. The Border. Canada and the US have a shared interest in the co-management of the border, and we’ve worked well on the issue so far. But the days of the ‘undefended border’ are over. What stands to become more significant, however, are the divergent conceptions that the two countries appear to be developing about what the border means. For the Americans, successful border management is increasingly about containing the potential threats that integration poses to their safety. For Canada, successful border management is about preserving the access that Canadians and Canadian goods, services, and investment have to the US. The first impulse of US officials when it comes to our border issues is to liken it to those which they face on their southern frontiers (Mexico). Moreover, there are competing views within the executive and legislative branch as to whether the border is about ensuring the free 000060 �Document disclosed under the Access to Information Act Document divulgui en vertu de la Loi sur I'accis a I'information movement of people and goods (which benefits both countries) or about law enforcement and immigration policy. Taken together, this suggests that, as much as has already been done to tighten control of the border, the prospect of additional measures will remain on the agenda. With security holding the edge over trade in the battle for priorities, it is not at all clear that we will be able to secure exemptions from NSEERS or similar additional measures to come (as illustrated by the recent Congressional initiative to have a full-scale entry/exit program in place by 2005, which threatens the progress achieved on the Smart Border Accord, and the nature of border access as a whole). The need to ensure the safe and efficient movement of people and goods across the most economically valuable border is obvious - as are our shared objectives with respect to countering terrorism and crime. The individual sectors (customs, immigration, intelligence) work well together, and have done so for years. However, the current US political dynamic (security first) and growing bureaucratic momentum (the creation of the leviathan Department of Homeland Security) confronts us with a new situation. Indeed, the prospect of the US taking action across a wide variety of sectors (immigration, law enforcement, defence) to support the strategic goal of strengthening homeland security could have far-reaching implications for Canada. Considered of itself, each US imitative might look like an incremental change in a discrete area. However, the initiatives will be part of a broader agenda, the cumulative effect of which could recast our personality as a North American country. Economic, Trade, Energy and the Environment: Room for Guarded Optimism? Economic policy. President Bush has promised a new “economic stimulus” package early next year, which was widely expected to include significant tax cuts. Republican leaders have suggested that this package will include a number of relatively modest tax measures. While tax cuts remain high on the GOP agenda, they are competing with demands for higher spending on defence and homeland security as well as a politically-popular prescription drug benefit for seniors. The Republican tax strategy will have two key elements. The first will be a political push to make last year’s SI.35 trillion tax cut package permanent. The second will be a stimulus package tied to economic recovery. This could include an immediate increase in the child tax credit, a rise in contribution limits for retirement savings accounts and an expansion of tax breaks for business investment. Strategically, the Republicans will try to shoehom many of these tax cuts into the budget reconciliation exercise, which requires only a simple majority in the Senate rather than the 60 votes that are required for most measures. Even with modest tax cuts, private sector forecasters expect that the US budget deficit will rise from SI60 billion this year to S200250 billion in fiscal 2003. Trade policy. It will be useful to remember that the 108th Congress will not be more willing than the 107th to endorse changes to US trade laws. Nor will it deal away protections for entrenched agricultural sectors, the steel trade, textiles and lumber. And a Republican Administration will be anxious to demonstrate that the system of trade agreements is serving US interests and to show its determination to enforce those agreements. That said, the starting point for debate will be more positive than what we saw with the 107th Congress. 000061 �Document disclosed under the Access to Information Act Document divulgue en vertu de la Loi sur I'acces a /'information In terms of the forward trade agenda for the 108th Congress, there are three dimensions of interest to Canada. First, the impact on bilateral trade files. Second, the implications for US compliance with WTO decisions. Finally, the prospects for future trade deals requiring Congressional approval. We anticipate that the prospects for a negotiated, long-term, policy-based solution to the softwood lumber dispute will improve. The results of the election help to create an environment in which the Administration is better able to defy extremist demands from the US Lumber Coalition in Congress. The change in Congressional leadership will assist an Administration that is eager to demonstrate its free-trade credentials, including a message that US trade laws do work to achieve market-opening and “fair trade”. Other contentious issues -- such as agriculture and steel — may also be easier to address. On wheat, the Administration’s earlier promises to pursue a WTO case against the Canadian Wheat Board will not have the same urgency. On steel, the US industry can continue to count on influential supporters in Congress. Canada’s decision on safeguard actions against steel imports will be watched closely, and we can expect a swift negative reaction from Congress if US exports are included in the action. That said, the Parliamentary Steel Caucus has established a good working relationship with its Congressional counterpart and this will generate support for a North American initiative on steel. Creation of a government-led, North American forum to discuss issues relating to the steel trade may help to shield Canadian producers from the numerous protectionist actions promoted by the US industry. Apart from bilateral trade issues, we will watch how the new Congress deals with major WTO decisions. These disputes will put to the test Congressional willingness to uphold the US Government position since the establishment of the WTO that the US will abide by WTO dispute settlement decisions. The 107th Congress saw much criticism of specific WTO decisions and the Trade Promotion Authority bill contains a negotiating objective calling for the Administration to “rein in” the WTO Appellate Body in instances where it is considered to have overstepped its authority (particularly in relation to decisions finding against US trade law). Looking ahead to further negotiations to liberalize trade, Ambassador Zoellick will see the new Republican-controlled Congress as more receptive to the Administration’s ambitions for trade agreements with a growing list of bilateral partners (Chile and Singapore first, followed by Central America, Morocco, Southern Africa, Australia and down the road, the ASEAN countries). Similarly, US leadership in WTO and FTAA negotiations is more likely in a Republican-controlled Congress with an Administration that has nailed its colours to the mast of open markets as the best hope to achieve economic, political and social development at home and abroad. Energy. Aided by a Republican-controlled Senate, an energy bill will be vigorously pursued in the new Congress and we are likely to face challenges to our interests similar to those found in the last bill (Alaskan pipeline subsidies, electricity policy). Advancing Canadian energy interests will benefit from a pro-active strategy that engages 000062 �Document disclosed under the Access to Information Act Document divulgue en vertu de la Loi sur I'accis a /'information the Administration on our mutual energy objectives. More intensive work with the US on energy (whether in bilateral or trilateral fora) offers an opportunity to underscore Canada’s special relationship with the US in a vital economic sector and will assist in managing the inevitable problems that re-emerge in an energy bill. Environment. At first blush, the elections would not seem to have handed us a propitious climate for forward-looking environmental policy. And, to an extent, that’s true: we will not see the U.S. ratify Kyoto, and any future energy bill is likely to contain provisions for drilling in the Alaska National Wildlife Refuge. The Administration and Congress are also likely to move in favour of reducing the environmental regulatory burden on private enterprise and devolve more of the responsibility for environmental stewardship to the state and local level. That said, this dynamic could yield limited progress - at the state and/or local level (to which most eyes will be turned, as little is expected at the federal level) and possibly in terms of limited government funding for S&T or R&D advances by private enterprise (which may see money to be made in environmentally-friendly technologies). MANAGING THE RELATIONSHIP The ongoing challenge will be to manage the relationship in a way that balances security and prosperity, and shores up our image as one of a select group of American allies. Secretary Powell’s visit to Ottawa was encouraging in that it reflected a US desire to engage Canada, and resulted in usefully clarifying both sides’ understanding of key issues. However, the new environment challenges long-standing assumptions that have governed how we manage our relationship with the US. The US no longer automatically factors in the views of traditional allies when it makes its decisions on foreign and security policy. The countries that will influence US policy will be those that choose to engage with them - effectively, self-selecting allies and partners. We can choose to engage or not - but they will take note of our decisions, and deal us in or out of future decisions accordingly. In North America, the comfortable era of Canadian exceptionalism may well be over. The emergence of these factors will confront us with fundamental questions about how we manage the bilateral relationship, and what type of country we want to be. We will also be dealing with new partners (nine new border state governors, a leviathan Department of Homeland Security). The key for us will be to stay out in front of emerging problems, identify our interests, and take advantage of our small size to exploit our power of proposal: the opportunity that we have to be the first to propose solutions and set the agenda s.15(1) 000063 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Identifier An unambiguous reference to the resource within a given context CDIQ00005 Title A name given to the resource Background Material on Canada-US Relations Date A point or period of time associated with an event in the lifecycle of the resource 04-Dec-02 Source A related resource from which the described resource is derived BAN 2014-01289-X, Box 12, File no. MCU2003-00765 – Ministers Visit Washington DC 8-10 January 2003, Library and Archives Canada Creator An entity primarily responsible for making the resource A-2022-10029 LAC Rights Information about rights held in and over the resource Canadian Crown Subject The topic of the resource Iraq Publisher An entity responsible for making the resource available Canada Declassified Type The nature or genre of the resource Text Format The file format, physical medium, or dimensions of the resource PDF Language A language of the resource en