The Fraser Institute: Harper Government Must Move Quickly to Establish a Relationship With a Barack Obama Administration
...For the past several years, Canada and the U.S. have been moving to integrate markets in the two countries, initially under the North American Free Trade Agreement (NAFTA) and more recently through the Security and Prosperity Partnership (SPP). The ability for transactions to occur freely across the border has been a key engine of Canadian growth in the past two decades. In 2007, Canada's trade with the United States amounted to 67 per cent of its overall trade, or 40 per cent of GDP. But these gains could disappear if the new U.S. administration embraces more protectionist policies.
"Given Obama's expressed hesitation for free trade agreements and his promises to seek more labour and environmental conditions in agreements such as NAFTA, Canada will likely face more than security demands from the new administration in bilateral negotiations on deepening trade," Moens said.
"But Obama is a highly intelligent person, and a master politician. If Harper can persuade him that the United States will benefit from good relations with Canada, he may adjust his policies."
The other key issue facing Canada is the likelihood of Obama bringing forward a carbon cap-and-trade system. Canada is particularly sensitive to arbitrary caps on carbon set in Washington which would most likely lead to American industry demanding import tariffs or levies on Canadian energy products and manufactured goods. Because carbon policies lead to trade distortions, Canada can only minimize its losses if it joins an American cap and trade system. Any difference between the two markets on these regulations will likely hurt the Canadian export sector.