US embassy cable - 05OTTAWA3090

C O N F I D E N T I A L SECTION 01 OF 03 OTTAWA 003090 
 
SIPDIS 
 
NOFORN 
 
FOR THE SECRETARY FROM AMBASSADOR WILKINS 
 
E.O. 12958: DECL: 10/13/2015 
TAGS: CA, ENRG, ETRD, ETTC, PGOV, PREL, SCRS 
SUBJECT: A PARTNER IN TRANSFORMATION - YOUR VISIT TO 
CANADA, OCTOBER 24-25, 2005 
 
 
Classified By: AMBASSADOR DAVID H. WILKINS, REASON 1.4 (B) AND (D). 
 
WHAT UNITES US IS GREATER THAN WHAT DIVIDES US 
--------------------------------------------- - 
 
1. (SBU) As you prepare to visit Ottawa, I want to extend a 
warm welcome and reaffirm this Mission's strong commitment to 
making your trip a success.  I have been on the ground in 
Canada for just under four months and have traveled to all 
but one of the country,s ten provinces and three 
territories.  I have met with hundreds of Canadian officials, 
businesspeople, and citizens, and have gained a fairly good 
sense for what Canadians are thinking.  Your visit will be an 
excellent opportunity to showcase one of history,s most 
unique cross-border partnerships, and to convey the key theme 
that what unites us is greater than what divides us. 
 
A PARTNER IN TRANSFORMATION . . . 
--------------------------------- 
 
2. (C/NF) I strongly believe that Canada can be an active and 
reliable partner as we seek to transform societies around the 
globe, but only if we respond to the bilateral irritants that 
have become so politicized here.  Should we bother to do so? 
Is Canada worth the effort?  I believe it is.  Unlike several 
years ago, where we opposed each other on a series of key 
international problems (e.g. de-mining, the ICC, and 
disarmament), on the key issues today we are united.  This 
means that there are now many areas where Canada,s neutral 
posture, resources, and experience in nation-building and 
good governance are making a difference, and Canada could 
make an even greater difference if it were empowered and 
encouraged to do so. 
 
3. (C/NF) In Haiti, Canada has been consistently engaged with 
police development and the political process for over a 
decade and is committed to staying the course in the future; 
in Sudan, there is a fair amount of public support for adding 
to a recent up-tick in involvement in helping bring the 
conflict to a successful conclusion; in Iraq, Canada,s 
unique experience with resource-lopsided federalism and 
election monitoring allowed it to play a positive role in the 
political process and constitution writing; on Avian Flu 
Canada has taken a proactive leadership role; and in 
Afghanistan Canada has just emplaced a PRT in Kandahar and is 
preparing to move a sizable unit into the theatre in the 
summer.  Canada wants to play a larger role in the world and 
should continue to respond positively to our gestures that it 
do so, while partnering with us in a number of areas. 
 
. . .AFTER ATTENTION TO SOFTWOOD AND WHTI 
----------------------------------------- 
 
4. (C/NF) But for Canadian officials to truly partner with 
us, they will need to show progress on some of the issues 
that are poisoning the bilateral relationship.  Canadians are 
concerned that our total commitment to the war on terror has 
distracted us from some of the day-to-day issues that concern 
them, currently softwood lumber and the WHTI.  The USTR 
announcement that we would not implement a NAFTA ruling on 
softwood, coupled with our call to settle the dispute through 
negotiations, unleashed a firestorm of indignation in 
government and press circles.  The uproar has not died down; 
many traditional supporters of North American integration, 
such as the Council of Chief Executives, have sounded the 
alarm over our policy in the dispute.  Some of this is 
political theatre, but for many opinion leaders, it plays to 
historic views that Canada is being bullied by a larger 
trading partner.  Their frustration over softwood and their 
inability to get our attention causes them to ratchet up the 
rhetoric quickly, playing their energy card again, after 
using it with BSE and Devils Lake.  They uniformly cite our 
failure to comply with the rule of law. 
 
5. (C/NF) The Canadians have shaped this issue as one no 
longer about the trade specifics of softwood lumber but 
rather about being treated fairly.  The legal issues are 
obscure, and much of the Canadian industry reportedly would 
like to come back to the table, but Canadians see our 
position in broad and symbolic terms as a sign of lack of 
U.S. respect for NAFTA and for Canada.  Prime Minister 
Martin,s speech in New York last week accusing us of bad 
faith was followed by an orchestrated ministerial visit to 
China in quest of new energy markets -- more political 
theater, but in tune with public sentiment.  Deliberately 
diverting energy supplies away from the U.S. would flout 
NAFTA commitments and have substantial economic costs for 
Canadian energy producers, but there are historical 
precedents.  Public perceptions fed by the GOC that NAFTA is 
becoming a dead letter, however unjustified, may embolden 
energy protectionists as key domestic industries (including 
forestry) and consumers suffer from rising energy prices. 
 
6. (C/NF) The softwood issue will not only come up during 
your visit; it will set the stage for discussion of all other 
political and economic issues.  I recommend addressing it 
head-on by reiterating U.S. commitment to NAFTA and our 
willingness to resolve this as quickly as possible.  At a 
minimum, Canadian officials want a sign of good faith, and 
the assurance that the issue has high-level attention in the 
U.S. government. 
 
7. (C/NF) Wherever I travel, the issue that quickly follows 
softwood as the key bilateral concern for Canadians, is the 
upcoming requirement for Americans and Canadians to possess a 
passport or other travel document in order to cross the 
border.  Canadians believe this proposal, scheduled to be 
implemented in January 2008 for ground travelers, will 
curtail the level of cross-border travel and in the process 
harm the Canadian economy.  While probably overstated, the 
figures that are being bandied about are of losses in the 
area of hundreds of millions of dollars per year for Canadian 
businesses, and the demise of the unified border-town 
culture.  The key point in this is simply to emphasize that 
the precise document to be used for cross-border travel 
remains to be developed, and to stress that we will do so 
with full input from stakeholders on both sides of the 
border.  When the system it implemented, it will probably 
actually improve cross-border travel, by allowing for more 
efficient border crossings with the standardization of 
documents. 
 
IN MINORITY GOVERNMENT -- IT,S ABOUT SURVIVAL 
--------------------------------------------- 
 
8. (C/NF) The primacy of short-term politics to everything 
that is happening here cannot be overestimated.  The Liberal 
government of Paul Martin is on the ropes, and it will do 
whatever is necessary to retain power.  By the narrowest of 
margins, PM Martin was able to hold off a confidence vote 
this past May, but he did agree to hold an election some time 
early in 2006 (probably April).  He is focused almost 
exclusively on winning a clear majority in this upcoming 
election, a tough proposition given current poll results. 
 
9. (C/NF) All this has meant that, on top of historic 
Canadian reticence about being seen as "too close" to the 
U.S., this government is hypersensitive to the turbulent 
political winds with regards to their posture towards us on 
each and every issue.  They dithered on missile defense 
cooperation for a year and then allowed the left to define 
the debate before they gave in to domestic pressure.  They 
quickly embraced shrill rhetoric on disputes such as BSE, 
Devil,s Lake, homicide deaths in Toronto and softwood 
lumber, often merely to appear to be standing up to their 
powerful southern neighbor.  While no Canadian leader can, in 
the current environment, ignore issues such as softwood, you 
should make the point that we believe the level of rhetoric 
and the elevation of some issues that could have remained at 
the bureaucratic level, to high-level bilateral irritants, is 
not helpful.  Our message to Canadian officials and opinion 
leaders should be that we hope we can work together to 
accentuate the positive in the relationship and not let the 
small number of negatives define our association for our 
citizens. 
 
ECONOMIC TRENDS IN CANADA,S FAVOR 
--------------------------------- 
 
10. (C/NF) In addition to the politics of minority 
government, there are economic trends that are affecting the 
bilateral relationship.  As an energy exporter with immense 
nontraditional reserves in the Alberta oil sands, Canada 
enjoys a healthy and rising trade surplus with the United 
States, overwhelmingly its largest partner.  Canada,s fiscal 
picture is also enviable, with persistent surpluses and net 
debt less than 40% of GDP.  Rising energy prices, however, 
have created winners and losers among Canadian provinces and 
economic sectors, stressing the automotive industry (a key 
exporter) and other major industries such as forestry. 
Rising home heating prices are likely to become a hot 
political issue as we head into winter.  The biggest driver 
of Canadian economic growth, of course, is the U.S. economy; 
Canadian policymakers are therefore worried about any signs 
of economic downturn in the U.S. as well as the issue of 
global imbalances and increased competition with China in the 
U.S. market.  Aside from the $7 billion softwood dispute, our 
trade relationship is close and productive; our major trade 
concern is Canada,s delay at strengthening intellectual 
property rules that are still weaker than in most developed 
countries. 
 
ENVIRONMENTAL AGENDA 
-------------------- 
 
11. (C/NF) Two environmental issues which Canadians continue 
to bring up are drilling in the Arctic National Wildlife 
Refuge (ANWR) and climate change.  PM Martin recently 
complained that exploiting the oil and gas resources in ANWR 
is not worth the risk of permanent environmental damage, 
failing to acknowledge that the total development footprint 
in the 19 million acre refuge would be less than 2000 acres. 
PM Martin brought this up with the President during his phone 
call on October 14. 
12. (C/NF) I would also recommend if you have an opportunity 
to raise our record and our cooperation with Canada on 
climate change, it could go a long way to set the stage for a 
successful 11th Conference of Parties (COP-11) in Montreal 
later this year.  Canadians are beginning to recognize that 
the President,s approach -- emphasizing concrete initiatives 
and research in collaboration with other countries -- is 
producing results.  They would benefit in hearing this 
directly from you. 
 
13. (SBU) I again reiterate our, and our Canadian host,s, 
enthusiasm for your visit.  You will find the Canadians 
engaging and friendly and the Embassy team first-rate.  We 
see this visit as a tremendous opportunity to advance the 
bilateral relationship and find new opportunities to advance 
our agenda of transformation throughout the world. 
 
Visit Canada's Classified Web Site at 
http://www.state.sgov.gov/p/wha/ottawa 
 
WILKINS