We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.
{{ subpage.title }}
The US and Canada’s complicated love story
US President Joe Biden has said he wants to patch up a US-Canada relationship that frayed under Trump. In fact, Biden's first phone call to a foreign leader after taking office was to Canada's Prime Minister Justin Trudeau. That makes sense, considering the two long-allied democracies share a continent and do some $700 billion in annual trade across the world's longest land border.
Biden and Trudeau — who was best buddies with Barack Obama, Biden's former boss — share views in many areas, from human rights and democracy promotion to, in principle, climate change. But a host of issues will make it hard to smooth things over completely. What are the main sticking points between Ottawa and Washington right now?
🛢Climate and energy🛢. One of Biden's first executive orders scrapped the Keystone XL pipeline project, which would have carried oil from Alberta, Canada, to the Texas Gulf — a boon for Canada's oil industry, the country's number one export and crucial to its post-pandemic recovery. While Biden's move was consistent with his commitment to prioritize investment in clean energy, some in Ottawa felt snubbed by a lack of consultation.
Nixing the deal was a massive blow for Canada, which was relying on Keystone's infrastructure to boost its transportation capacity from landlocked Alberta province to lucrative energy markets in the Gulf Coast. "The US won't bear much of a cost… that will fall almost entirely on Canada," read a recent scathing editorial in Canada's Globe and Mail publication. To be sure, the US stands to lose roughly 3,900 — mostly temporary — jobs over a two-year period because of the axed deal. Still, Canada was on the losing side this time.
💰Trade equation💰. Biden's "Buy American'' executive order obligates US federal agencies to prioritize American bidders for US-based contracts worth more than $10,000. Importantly, it also raises the amount of US material a venture must include in order to be certified as "American-made."
While this protectionist approach to procurement is not new, Ottawa is worried that it will disrupt supply chains as it tries to boost its pandemic-battered economy (Canada's GDP shrank by 5.1 percent in 2020).
The implications of "Buy American" are clear: more American-made products means less foreign made ones. That's a blow for Canadian exports, 75 percent of which are sent to the US. As COVID rages on and the US-Canada border has remained closed for almost a year, these challenges are now more pronounced.
The US-China continuum. Like many other US allies looking towards a future with China as an economic superpower, Canada wants to maintain a robust alliance with a politically volatile US while also seeking to diversify economic relations with a country that could soon be the world's largest economy.
Indeed, Ottawa recently experienced the blowback of having its eggs in (mostly) one basket when the Trump administration slapped tariffs on Canadian aluminium, and demanded the grueling renegotiation of NAFTA. For Canadians, the recent policy volatility from one US administration to the next reinforces the need to make more friends, not fewer.
Chinese telecommunications has also become entangled in the US-Canada-China triangle. Canada has unofficially sidelined Chinese tech giant Huawei's 5G networks to appease Washington. Additionally, the arrest in Canada of Huawei CFO Meng Wanzhou (at the behest of the US for helping Huawei evade US sanctions on Iran) prompted Beijing to arbitrarily imprison two Canadian citizens. Clearly, the combative approach the US has taken towards China in recent years has been inescapable for middle-power Canada.
But China also presents Canada with new opportunities to cooperate on areas of mutual importance like climate change. These dynamics require a carefully crafted balancing act from a liberal pragmatist like Trudeau.
Looking ahead: Canada's longtime problem in Washington — lack of attention — will be profound under Biden. Trudeau and Trump both needed each other to pass a new trade pact, but Biden can make progress on many of his policy priorities (climate change, Iran, immigration) without help from the northern neighbor — and the Canadians know that their help is not crucial for America's new leader.
Keystone XL halt is no threat to US-Canada ties under Biden; Brazil's vaccine shortage
Ian Bremmer discusses the World In (more than) 60 Seconds:
Biden's first scheduled call with a world leader will be with Canada's Justin Trudeau. What's going on with the Keystone Pipeline?
Well, Biden said that that's it. Executive order, one of the first is that he will stop any construction or development of the Keystone Pipeline. This is of course an oil pipeline that would allow further oil sands oil to come to the United States. The infrastructure is significantly overstretched, it's led to backlogs, inefficiency, accidents, all the rest, but it also facilitates more energy development and keeps prices comparatively down if you get it done. So, there are lots of reasons why the energy sector in Canada wants it. Having said all of that, Trudeau, even though he's been a supporter of Keystone XL, let's keep in mind that he did not win support in Alberta, which is where the big energy patch in Canada is located. This is a real problem for the government of Alberta, Canada is a very decentralized federal government, even more so than the United States. The premier of Alberta is immensely unhappy with Biden right now, they've taken a $1.5 billion equity stake in the project. I expect there will actually be litigation against the United States by the government of Alberta. But Trudeau is quite happy with Biden, his relationship was Trump was always walking on eggshells. The USMCA in negotiations ultimately successful but were very challenging for the Canadians, so too with the way Trump engaged in relations on China. All of this, the fact that Trump left the nuclear agreement with Iran, the Paris Climate Accords, WHO, all of that is stuff that Trudeau strongly opposed. He's going to be much more comfortable with this relationship. He's delighted that the first call from Biden is to him. And it certainly creates a level of normalcy in the US-Canada relationship that is very much appreciated by our neighbors to the North.
Biden has promised 100 million COVID vaccine doses in 100 days. Meanwhile, Brazil is experiencing a shortage. What is happening?
Well, the president of Brazil has not taken coronavirus seriously at all. At least in the United States even though Trump was downplaying coronavirus, Operation Warp Speed was really significant, a major effort to build up and invest and acquire vaccines, the administration did a very significant job around that. In Brazil, the entire Bolsonaro administration basically abdicated on coronavirus. So, they've got well over 200 million people, they've got 6 million vaccines they've acquired so far. That's really been the result primarily of the governor of Sao Paulo not the Bolsonaro administration. This is an enormous problem for Brazil, it's an enormous embarrassment for Bolsonaro. You see calls impeachment that are rising yet again, his approval ratings are now in the low 30s. If they start slipping towards the 20s, he could start peeling off a lot of congressional support and impeachment could become a real issue. Certainly, elections coming up in Brazil, presidential elections in a year are going to be very, very challenging. And I watch that space pretty closely, brazil is going to suffer on the back of this more than a lot of other countries.
A video of Navalny posted after his arrest is going viral. He calls for supporters to "take to the streets" on January 23rd. What is going on?
Well, Alexei Navalny is the most well-known and popular of opposition figures in Russia. The biggest mass demonstrations against Kremlin we've seen in years was the last time Navalny called for mass protests, was mostly Moscow, but you got cities across the country, urban intellectuals, primarily younger people, elites. But Navalny is still quite popular, he still has a significant social media following. Nothing close to a majority, this is not a threat to President Putin, it's nothing close to what you've seen experienced in Belarus for example in the past six months. But nonetheless, it is a significant aggravant for Putin, and that's why Navalny has been detained. I suspect that with the show trials that will go on, he'll probably be given a more significant sentence. I think given he's upped the ante by calling for these demonstrations and by releasing a bunch of videos that are embarrassing to Putin personally, and all of that, the Kremlin has the power. Even though Navalny has a strong international support base, the willingness of Americans or Europeans to significantly and meaningfully increase sanctions against Moscow in a way that would matter to Putin, just isn't there. There just really isn't a stick to hit the Russians that would matter enough. Navalny doesn't matter enough, human rights in Russia don't matter enough to move the needle, especially given the level of economic, trade, and energy dependence that many of the Europeans have with Russia, the East Europeans have with Russia. The ideological orientation of Hungary in the EU, for example, towards Russia, they've just announced that they're getting the Sputnik V vaccine for their people, even though only 11% of Hungarians say that they would take a Russian or Chinese vaccine, over 50% would take Pfizer or Moderna, but they're not that one, and the fact that the United States is focused mostly domestically. So, all of that makes it a lot harder to move the needle on Putin when it comes to Navalny. And very sad for Navalny as a consequence, an incredibly courageous man who has faced, is facing, and will face an extraordinary amount of personal peril.