Blogs & Comment

Don’t let Keystone XL hijack Canada’s U.S. trade agenda

Canada and the U.S. could make real progress on many trade fronts, if not for the cold silence that has settled around Keystone

U.S. ambassador to Canada Bruce Heyman

U.S. ambassador to Canada Bruce Heyman. “Don’t get me wrong. This is an important issue. But I think the numbers speak for themselves.” (Adrian Wyld/CP)

Bruce Heyman knows the question is coming, because it’s always coming. The most frequent query for the U.S. ambassador to Canada involves the fate of the Keystone XL Pipeline. “In some interviews, the question is perfunctory—some people even tell me what my answer will be,” Heyman said in a recent meeting with Canadian Business editors. “And then we move on.”

The ambassador’s response has consistently declined to comment on the project since his arrival last year, saying he’d risk prejudicing the State Department’s ongoing evaluation of the project. Over the past five years, the pipeline has grown from an issue between two countries to the issue between them. It now defines not only our economic bond but our political one as well. And, as such, the relationship is now testy. The Globe & Mail reported in March that Heyman has had only one meeting with Prime Minister Stephen Harper since arriving in Ottawa, and that was to present his credentials. The prime minister also indefinitely postponed a North American leaders’ summit planned for February, seemingly uninterested in sharing a stage with U.S. President Barack Obama. Canadian politicians now seem like toddlers who asked nicely, then whined, then screamed—and have finally resigned themselves to sulking.

All of this serves to overinflate the importance of Keystone to Canada. The cost of constructing the pipeline is $8 billion—roughly the value of four days of cross-border trade. Even a 3,200-kilometre pipeline looks small in the shadow of a US$1.4-trillion relationship. Yet any assessment of the U.S-Canada connection now stops and ends on Keystone. Heyman wisely argues for a broader view of the situation. “Don’t get me wrong. This is an important issue for many who are interested in oil and pipelines, and I don’t minimize the issue,” he says. “But I think the numbers speak for themselves on the trading relationship. It’s working.”

In fact, exports to the United States have increased in each of the past five years, growing by 11.6% in 2014 alone. It’s time for Canada to stop dwelling on its disagreements with the U.S. and to focus on areas of mutual benefit. Some of these are small issues, such as tiny differences in regulations that stifle the flow of goods across the border. As Heyman notes, lipstick containing sunscreen is classified as a drug in Canada and faces more regulations than it does in the United States. Thus, bringing a new product to Canada costs roughly $150,000 versus $700 on the other side of the border. Addressing little issues of bureaucratic friction could add up to a large difference when taken together.

There are also big, broad issues where the two countries find agreement. Obama views signing new trade agreements as a top goal for “the fourth quarter” of his presidency, says Heyman, starting with the Trans-Pacific Partnership (TPP). That deal, if completed, would link 12 countries and nearly 685 million consumers. The Harper government has a laudable record on free trade, but its support for TPP appears to be wavering, largely over a political need to maintain Canada’s system of supply management for dairy products.

These are issues we could make meaningful progress on if not for the cold silence that has settled around Keystone. Canada’s government needs to take advantage of the opportunities ahead and stop allowing a single issue to define its most important trading relationship.