Energy Security Issues
Canada is the biggest source of imported crude oil for the United States and crucial to stable energy prices in the United States. Canada's remaining oil reserves, second in size only to Saudi Arabia, are a key component in the U.S. energy security calculations.
There seems to be a tacit understanding that the United States will have the priority over all others in buy crude oil from Canada.
To facilitate future transfers of crude oil, the U.S. is expanding infrastructure to produce, upgrade, refine, and transport oil from Canada to the United States. More than half of Canada's remaining recoverable oil reserves are heavy oil reserves embedded in sand. This type of crude oil requires an expensive, environmentally harmful extraction process, so the United States will have to build special refineries to handle them.
To further complicate the process, Canadian lobbying groups are insisting that some or all of the crude oil is processed in Canada before being transported to the United States. Increased refining operations could create thousands of new jobs in Canada, which is likely to gain popular support. It is already understood that any infrastructure built in either country can only be built by American oil companies themselves. Thus, Canada is aiming to receive free oil refining infrastructure for its cumbersome heavy oil reserves and eventually selling the Canadian-refined oil to the United States at a higher rate than it would have gotten for mere crude oil.
U.S. energy demands have created another potential conflict between American and Canadian interests. American companies are currently developing a natural gas pipeline through from Alaska, through Canada, in into the United States. However, Canada is developing a similar natural gas pipeline to the United States. There are concerns that two natural gas pipelines are expensive and that there will not be sufficient building materials available in the areas through which the pipeline is to be built.
Canada is sovereign over much of the pipelines' paths so it is probable that it will give preference to the Canadian pipeline should building supplies become limited.
Near-Term Direction of U.S.-Canada Relations
In the next few years, economic issues will be paramount as Canada and the U.S. continue their economic recoveries. The U.S. efforts at economic recovery will drive U.S.-Canada relations more than any other reason.
To help employers offset the cost of doing business in the U.S., labor regulations (i.e. minimum-wage, health-care, and labor unions) have been relaxed by both the Federal government and State governments to give employers more latitude in setting wages.
Governments have also actively subsidized industrial firms, in the form of low-interest loans, tax breaks/incentives, and infrastructure development.
Most controversially, (at least from an international perspective) the Federal Government has implemented trade protectionism measures in the form of increased customs duties, import quotas, and product safety requirements to inhibit the flow of foreign products into the United States.
The U.S. is seemingly willing to take any measures necessary to revive its economic infrastructure, thereby reducing unemployment and reducing its balance of payments deficits. Much of U.S. attention in this area will be focused on China and the more discriminatory practices of trade protectionism will appear in product categories at which China excels. U.S. protectionism can spill over to Canada because Canada competes in some of the same product categories as China. Thus, for the immediate future, Canada and the United States will continue to have conflicts over American protectionism, but since the protectionism is really aimed at Asian economies, Canada will likely be able to obtain exceptions and waivers for its products as it did with the "Buy America" provisions.
American anxiety over national security will continue to control Border Security issues because Al-Qaeda is still at large. This means that the U.S. will remain aggressive over Border Security issues until the Terrorism threat is resolved in the perception of the American public. For Canada, this means a continued loss of sovereignty and forced participation in American security and law enforcement efforts.
The Effect of the Obama Administration
The American failure in Iraq and the false intelligence grounding the decision to invade is vindication for Canada, who refused...
Obama took advantage of these trends by pulling out of Iraq and has shifted the focus to Afghanistan, the nation Canada volunteered to invade with the U.S. back in 2001. Although Canada is scheduled to withdraw troops from Afghanistan in 2011, this will not be perceived as premature as one decade of military assistance from Canada is more than reasonable for the purposes of finding Osama Bin Laden and eradicating Al-Qaeda.
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