Midterm elections elect one-third of the US Senate and the entire House of Representatives, both of which are currently under Democratic control. Election forecasts have Republicans as overwhelming favorites to win back the House of Representatives and, increasingly, as slight favorites to retake the Senate. But regardless of which party holds the balance of power in Congress after the votes are counted, any change in power will have little impact on relations between Washington and Ottawa. “There’s not really a partisan divide in Canada,” said Chris Sands, head of the Canada Institute at the Wilson Center, a Washington-based think tank. “The desire for good relations with Canada and to work things out and occasionally have a serious conversation … is pretty consistent and … the makeup of Congress probably won’t change that.” Maryscott Greenwood, head of the Canadian-American Business Council, pointed out that the US-Mexico-Canada trade agreement pact, referred to in Canada as CUSMA, was ratified with a Republican in the White House and a Democratic-controlled House of Representatives. “No matter what happens, there will be a lot of new faces in Congress and it’s up to Canada … to showcase the Canadian American relationship to those new members,” Greenwood said. However, both Sands and Greenwood said a number of critical issues will be central to the future Canada-US relationship – regardless of which party controls Congress.
Inflation and the economy
Like Canada, the United States has been struggling with record inflation over the past year. Polls have listed the cost of living as the top priority for American voters. Central banks in both countries have raised interest rates in recent months in an effort to bring inflation under control. But those increases also slowed economic activity, leading many economists to predict a recession sometime in 2023. Because of the ties between the U.S. and Canadian economies, cooperation on economic issues will be critical in the coming years, Greenwood said. “How do we make sure that inflation doesn’t go bananas? How do we make sure that people are employed? And that’s not an easy task,” he said. “There are ways for Canada [and] the United States to work together on the economy that could help cushion the blow.” The US recently passed the Inflation Reduction Act, which includes hundreds of millions of dollars to jump-start a new domestic industry making parts for electric vehicle batteries. However, the industry will require access to some critical minerals, which could attract investment to Canada’s mining sector. Ottawa committed $3.8 billion in last spring’s budget to develop a critical minerals strategy. Greenwood said progress on that strategy has been slow. “If Canada can move faster on its critical minerals strategy, that would be an example of how it could work with the United States, to participate in the spending bonus that’s coming,” Greenwood said. Sands also suggested that the US and Canada could work together to provide easier access to business licenses to stimulate economic activity on both sides of the border. “I think there’s a lot of potential for bipartisan support in this area, and that would certainly be a net positive for Canada,” he said.
environment
Another big piece of the deflationary bill is the $369 billion the U.S. is investing in climate change programs over the next decade — including clean energy incentives that Ottawa sees as a threat to future investment in Canada. The Canadian government responded with a plan to cover some of these incentives last week’s autumn financial statement. Sands said that if Republicans gain more influence in Congress, they will likely push for changes to the act. “I don’t think everything in this bill is going to be rejected. I think it should be rebranded so the Republicans can take some credit,” he said. US President Joe Biden signed his signature climate bill on Tuesday, August 16. The so-called Deflation Act is a budget bill that affects clean energy, prescription drug prices and corporate taxes. (Leah Millis/Reuters) After the law was passed, Prime Minister Justin Trudeau downplayed warnings that Canada was lagging behind the U.S. on climate action — pointing in part to Canada’s carbon tax. But Sands said that while a national carbon tax is a “dormant issue” in the US, he wouldn’t be surprised if it became part of the conversation. “If the U.S. is even thinking about moving in that direction, that would be a hot button for Canada,” he said.
Piping
Another hot button issue between Washington and Ottawa in recent years has been cross-border pipelines. Biden effectively killed the Keystone XL pipeline – which would have carried 830,000 barrels of crude a day from the sands in Alberta in the US – when he revoked the presidential permit on his first day in office. Even if Republicans — who are overwhelmingly in favor of the project — take control of the House of Representatives, Greenwood said they likely won’t be able to revive Keystone. “As long as the Biden administration is in the White House … you’re not going to get the Keystone XL pipeline back,” he said. US President Joe Biden issued an executive order canceling Canada’s Keystone XL pipeline on his first day in office. Here you see pieces of unused pipe that were stored in 2015 in a yard in Gascoyne, ND. (Alexander Panetta/The Canadian Press) But Sands said a Republican-controlled House could shift the debate toward reevaluating how pipelines and other infrastructure projects are approved in the U.S. He also pointed to Enbridge’s Line 5 pipeline — which runs across Michigan from Superior, Wisconsin to Sarnia, Ont. — as an example of the United States’ complicated permitting system for such projects. In 2020, Michigan Governor Gretchen Whitmer revoked the easement that had allowed the line to operate since 1953. Enbridge has been fighting Michigan in court, and the Canadian government has begun talks with Washington to keep the pipeline operating. While Sands said Washington will likely want to have the final say on Line 5, state government involvement makes the situation complicated. “It’s a sign that in a more fundamental way, we’re not doing a good job of running cross-border infrastructure,” he said. “So I think there’s time to restart that conversation and think about how we’re going to allow and rethink infrastructure. That’s something that I think has bipartisan support.”
Journey
One sticky issue that is likely to remain, no matter which party ends up in control of Congress, has to do with cross-border travel — specifically, the NEXUS program that facilitates the flow of people across the Canada-U.S. border. Last week, a bipartisan group of members of the US Congress sent a letter to their Canadian counterparts on the Canada-US Interparliamentary Caucus asking for their “assistance in addressing an issue of mutual concern: the backlog of NEXUS and the continued closure of Canadian service centers ». NEXUS centers south of the border reopened in April after a pandemic-related hiatus. Canada, however, has not done the same with its registration centers because of concerns about extending legal protections to US Customs and Border Protection (CBP) officers operating on Canadian soil — protections those same officers already enjoy. in pre-clearance areas in Canada airports. The federal government hasn’t said when — if ever — those Canadian offices will reopen, but Trudeau said late last month that he’s “willing to do it again.” Canada’s ambassador to the U.S., Kristen Hillman, said the U.S. is holding the NEXUS program “hostage,” seeking legal immunity for officers working in a Canadian-based office. US Ambassador to Canada David Cohen, meanwhile, said “it’s Canada’s problem to solve” and the US is dead set against reinstating the program without legal rights for its officers. The NEXUS issue is a “major irritant,” Greenwood said. “Democrats and Republicans are concerned about this. “NEXUS is really hanging by a thread. Canada should be quite concerned about the future of this program if it doesn’t find a path forward.”
