||How U.S. Presidential Election Will Affect Canada (and It Will)
||Sunday, November 04, 2012
Institution and HR Management
||Nov 06, 2012
OTTAWA — Canadians don’t get a say in who’s elected to the White House Tuesday, but we’ve got skin in the game since the result will have wide-ranging impacts for us.
Here’s a look at how a Mitt Romney presidency or a Barack Obama second term could affect Canadians:
Canada’s reliance on the U.S. and the American military for its defence and security is unparallelled. It’s one of the main reasons this country gets away with spending just over one per cent of GDP on the military when the NATO target is two per cent.
The U.S., for the record, spends about four per cent of its GDP on defence.
That is expected to change as cuts to American military spending are inevitable given the state of the U.S. economy and its multi-trillion-dollar deficit. The degree of reduction, however, depends on who comes to the White House.
Romney’s plan will have least impact on Canadian defence and security, as he wants a minimum of four per cent of U.S. GDP spent on the American military.
Obama’s plan is potentially more worrying for Canadian military planners. While he has not provided any specifics, Obama has said he plans to use half the money saved from the U.S. pullout from Iraq and Afghanistan to pay down the debt, and re-invest the other half in infrastructure.
If that represents a return to pre-2001 funding levels — it’s not clear if it does or not — then that would put U.S. defence spending way below four per cent, perhaps even closer to three per cent.
That still represents major dollars, but Canada and other U.S. allies will undoubtedly face pressure to start doing more and increase their defence funding.
The fate of Obama’s public health care plan has been another central theme during the campaign, with Romney promising to scrap it if elected president. If that happens, Canadians, even though many like public health care as a concept, may want to breathe a sigh of relief.
The Patient Protection and Affordable Care Act, popularly known as Obamacare, is expected to result in 32 million more Americans having access to health care. The Association of American Medical Colleges has predicted that will result in a shortfall of 63,000 doctors by 2015.
The U.S. already has a history of recruiting Canadian-trained doctors and nurses to help address its existing shortfall. While the southward flow has slowed in recent years, there are concerns within the Canadian medical sector that Obamacare would reverse that trend.
The economic fates of Canada and the United States are intertwined. How the U.S. goes, so goes Canada.
The massive American national debt continues to spiral out of control, unemployment remains around eight per cent, and there is no agreement over how to get out of the mess.
Obama’s approach is to cut military spending and putting a greater tax burden on the country’s biggest businesses and wealthiest citizens to ease the pain borne by the middle-class.
Romney’s plan will be familiar to Canadians, as it emphasizes tax cuts for big business in the hope of encouraging job creation and investment, slashing non-military government spending, and downloading services to states.
Each plan has ramifications for Canada.
Romney made a point during the second presidential debate of highlighting Canada’s low corporate tax rate. He has promised to cut the U.S. rate, which could affect Canada’s ability to attract foreign investment. His proposed cuts to government funding could result in less work for Canadian companies that have taken advantage of U.S. government contracts.
Obama’s plan to maintain most government spending, and his promise to re-invest half of the billions saved from the pullout of Iraq and Afghanistan into infrastructure, may mean opportunities for Canadian companies.
Another issue is whether either candidate can get his plan through Congress, which has been gridlocked due to fighting between Republicans, Democrats and Tea Partyers.
Some say Romney will have an easier time as the Republicans are predicted to hold onto their majority in the House of Representatives, and may even retake the Senate. But even if the Democrats lose the Senate, the Tea Party movement could be a thorn in Romney’s side.
Others are hoping Obama will be the target of fewer political games in Congress during his second term, but that may be wishful thinking.
Energy and the Environment
The Conservative government and Canada’s oil and gas industry are waiting for the election results so the Keystone XL pipeline can get the go-ahead.
Romney has described the pipeline, which would carry Alberta crude more than 2,500 kilometres south to refineries along the Gulf of Mexico, as essential for weaning the U.S. off oil from pariah countries such as Iran and Venezuela. He has promised to approve it shortly after being elected.
But most expect Obama to also approve the pipeline if re-elected, particularly since Calgary-based TransCanada submitted a revised proposal several weeks ago, which is expected to address the initial environmental concerns.
Still, the two men have laid out very different approaches to securing U.S. energy and energy security, which will have other implications for Canada.
Obama has promised to continue investing in alternative energy sources, including wind and solar, in the hopes he can make the U.S. a world leader in such technologies. This could result in less reliance on Canadian natural resources, which would affect this country’s energy industry and encourage the drive towards China and other parts of Asia.
Romney has come out strongly in favour of securing U.S. energy from oil, gas and coal, and he has rolled Canada and Mexico into his plan by repeatedly citing the importance of “North American energy independence.”
But Romney also plans to significantly increase the number of drilling permits for energy companies in the U.S., and approve offshore drilling in the Gulf of Mexico, Alaska and other parts of the Arctic. He would also move forward on shale gas extraction and support continued use of coal.
Aside from reducing Canada’s energy importance, the strategy raises concerns over the threat of oil spills off the West Coast and continued pollution from coal-fired power plants in the Mid-West.
Romney has put a premium on protecting jobs and industry when it comes to environmental issues.
He has also promised to impose a rule that any new regulations must be offset with a matching reduction in red tape so business doesn’t have to pay more — which is expected to minimize tougher new environmental rules.
Meanwhile, Obama was much more modest in his approach to environmental issues during his first term than many had expected.
Environmentalists are encouraging him to be much more active on the issue in his second term, when he won’t have to think about re-election.
The Harper government has gone out of its way to change its emission-reduction targets and rules for vehicle emissions so they are aligned with U.S. policies.
If Romney relaxes American environmental policies, the Harper government will likely do the same. Similarly, the need to keep industry on both sides of the border harmonized may result in grudging Canadian acceptance if Obama brings in tougher standards and policies.
The Personal Touch
Stephen Harper has gone out of his way to build a good working relationship with Obama since the early days of Obama’s presidency. The two are often seen talking together at high-level conferences and summits, and they have had several one-on-one meetings over the past four years.
Canada and the U.S. have historically worked closely on the world stage, and this tradition has continued under Obama.
But Harper and Romney could develop a closer personal relationship as the two are conservatives, and Romney appears to share a similar view of the world with Harper. Romney has sounded like Harper as he’s talked about strongly supporting Israel and the dangers posed by Iran, the importance of free trade in spreading democracy, and the threat of a resurgent Russia.
There is a great deal of skepticism over whether Romney’s hard words towards China and Russia will actual amount to a change in U.S. foreign policy, or whether — like Harper — he will soften his tone once in power.
A Romney presidency might not lead to changes in Canadian foreign policy, but it could mean Romney will be more amenable to a personal phone call or request for assistance from Harper than Obama.
Competition and the Border
One of the driving forces behind the Conservative government’s free-trade agenda is obtaining a competitive advantage in markets like the European Union or India where the U.S. doesn’t have a deal.
Another is to maintain a level playing field in places where the Americans have a free-trade agreement, such as South Korea and Colombia.
Obama, whose party is wary of free trade, has been slow to negotiate or sign off on deals. He has indicated he would be more aggressive on this front in the future, though that may simply be rhetoric.
Romney has forcefully committed to fast-tracking talks and concluding agreements, which could lead to more competition for Canada.
Meanwhile, U.S. and Canadian officials have been quietly working behind the scenes to ease security at the border and facilitate the flow of two-way trade following an agreement announced by Obama and Harper in December 2011.
This work has slowed with the election, but most expect it to continue whether Obama or Romney are in the White House.