New GOP Congress changes Canada’s expectations, for the better

The 2014 midterm election results have forced many people to recalculate expectations of what can be accomplished in Washington in the final two years of President Obama’s administration. But perhaps none so busily as observers in Canada.

The normal assumption in Canada-U.S. relations is that Ottawa and the provinces are best served by working with the U.S. president and his administration. The administration is organized to interact with foreign governments, and takes the broadest view of the national interest in good relations with a close ally, neighbor and major trading partner. Congress, in contrast, is the locus of parochial interests which clamor for trade protection and domestic favoritism.

{mosads}Yet in recent years, Canadians have been frustrated by delays and shifting goalposts for approval of the Keystone XL pipeline. It has seemed to many Canadians that the Obama administration has placed parochial interests as well as domestic politics first, and treated Canada unfairly.

The new Republican House and Senate may change the equation if they are able to change the rules for granting a presidential permit (as H.R. 3301 currently proposes to do) or grant the necessary approval by legislation, as Congress attempted to do after the 2010 midterms, only to be rebuffed by the White House.

Ottawa has traditionally found it easier to deal with the U.S. executive branch because, even when there were delays (as with Keystone XL), there was at least the capacity to make decisions and follow through within the administration.

This didn’t seem to be the case when the Obama administration confessed that it had not set aside the $250 million needed to build a U.S. Customs plaza on the Detroit end of the New International Trade Crossing bridge, which has been planned and debated since 2001. Canadian taxpayers have already agreed to pay 75 percent of the $2 billion construction costs, including $500 million that was to have been the state of Michigan’s share.

Michigan Gov. Rick Snyder (R), newly reelected and a strong proponent of the new international bridge, is likely to lobby fellow Republicans in Congress to fund the Customs plaza and alleviate a major irritant in U.S.-Canada relations.

Past administrations have urged Canada to partner in negotiations of executive agreements to avoid the need for the U.S. Senate to ratify a treaty. The George W. Bush administration launched the Security and Prosperity Partnership for North America with Canada and Mexico to negotiate cooperation on inspection and regulation of trade within the bounds of statutory authority that Congress had already given to executive branch departments and agencies. The Obama administration took the same approach to its parallel talks with Canada and Mexico on border and regulatory cooperation.

In the Pacific Northwest, the United States and Canada have been negotiating the renewal of the Columbia River Treaty that governs the sharing of water and electricity from dams on the Columbia River, which starts in British Columbia and flows to the Pacific through Washington and Oregon. Prospects for Senate action on a final treaty suddenly look better if the two sides can come up with a new compromise.

All of this will come as a relief to Canadian Prime Minister Stephen Harper, whose Conservative government faces a federal election in 2015. Although Harper and Obama have been able to work well together despite their different political outlooks, Harper will find it easier to work with Republican leaders in Congress who share his perspectives on the economy, trade and international security. Many in the new GOP-majority Congress have admired Canada’s strong support of Israel, forthright leadership on Ukraine and Syria, and military participation in the NATO mission in Afghanistan and in allied airstrikes against the Islamic State in Iraq and Syria (ISIS).

Harper reduced Canada’s corporate tax rate to 25 percent, which attracted interest from some firms, including Burger King, in relocating to Canada in a “corporate inversion” to limit exposure to higher U.S. tax rates. And the IRS has actively pursued dual citizens in Canada, many of whom haven’t lived in the United States in decades, for hefty assessments of back taxes. Republicans in Congress will have less sympathy for punishing Canada for its tax rates, and could limit the Obama administration’s efforts in these areas between now and 2017.

For the next two years at least, Canada’s best friend in Washington may be the legislative branch, rather than the executive.

Christopher Sands is senior research professor and director of the Center for Canadian Studies at the Johns Hopkins University School of Advanced International Studies, and a senior fellow at the Hudson Institute. He is also G. Robert Ross Distinguished Professor of Business at Western Washington University and a member of the Research Advisory Board of the Macdonald-Laurier Institute.