TOPICS > Politics

As Obama Departs for First Official Trip Abroad, Canada Mired in Economic Woes

February 18, 2009 at 6:20 PM EDT
Loading the player...
President Barack Obama makes his first foreign trip to Canada on Thursday. NewsHour correspondent Tom Bearden reports on what items top Canadians' agenda, including trade and the economy.

TOM BEARDEN, NewsHour correspondent: It’s the last week of Winterlude in Canada’s capital, Ottawa. This is the 31st edition of an annual festival that promoters bill as the greatest winter celebration in North America. An estimated 650,000 people come to look at elaborate ice sculptures, skate on the world’s largest skating rink, and play in the snow.

But this year, with apologies to Shakespeare, might be called Canada’s winter of discontent. Canadians are deeply worried about their economy. After decades of budgetary and trade surpluses, the economy is in a recession, they’re running a deficit, and unemployment is on the rise.

And the state of the U.S. economy is a big reason why all that’s happening and why Canadians are watching the Obama administration’s efforts to revive our economy. Canada is the U.S.’s biggest trading partner. More than half of the country’s imports come from the U.S., and about 80 percent of its exports go south of the border.

DRAGOS CHRISTIA: There is a saying here that, you know, we’re living near an elephant and we have to do well with the elephant. And if the elephant does well, we do well, too. So if the economy in the U.S. is turning around, then the economy in Canada is going to follow.

TOM BEARDEN: Because the Canadian economy is so intertwined with the U.S., there is intense interest in the stimulus package that recently emerged from Congress.

LARRY DUKE: You know, it would be nice if I could get some answers. And as of now, there isn’t any clear plan as to, you know, what’s going to happen. So I’m sitting and I’m waiting and I’m listening and I’m hoping.

Canadian unemployment on the rise

TOM BEARDEN: Eight hundred people work at Lee Valley Tools in Ottawa. The company makes high-end woodworking and gardening tools and operates a large retail business that sells goods on both sides of the border.

Nobody has been laid off here, even though business is down. The same can't be said for the rest of Canada. The country lost 100,000 jobs in January, mostly in the auto industry. Unemployment stands at just over 7 percent; the U.S. is 7.6 percent.

Company President Robin Lee says he's hoping for closer economic cooperation.

ROBIN LEE, president, Lee Valley and Veritas Tools: I think probably a little bit more consultation and a little bit of recognition that Canada is the largest customer for the United States. Canada actually purchases more than all of Europe does from the United States. We both have the same interests.

And I think, generally, because of who our neighbors are, Canadians are fairly insecure. And we know who our friends are and what our relations are, but I think, at the same time, Canadians require a little bit of stroking once in a while.

TOM BEARDEN: Early on, so-called "buy American" clauses in the legislation -- requiring some raw materials be purchased only from U.S. suppliers -- raised fears here of new protectionist policies.

Michael Ignatieff heads the Liberal Party and is the opposition leader in the Canadian Parliament. He says those fears have subsided somewhat with new language that requires international free trade obligations be observed.

MICHAEL IGNATIEFF, Liberal Party leader: The United States economy needs what Canada exports to you. Our two economies are tremendously closely integrated. It's a source of strength, not weakness. When you're in a deep hole, you think, "Let's help our own guys first." I understand that. But that's not how the economy works efficiently.

Trade agreements

TOM BEARDEN: It was headline news in Canada last year when then-candidate Obama attacked the North American Free Trade Agreement, the 1992 treaty that removed most trade barriers between the U.S., Canada and Mexico, and blamed by some for loss of American jobs.

While Canadians are less worried that the U.S. will try to renegotiate NAFTA, they remain adamant that the agreement is good for both economies. Lawrence Cannon is Canada's foreign minister.

LAWRENCE CANNON, foreign minister, Canada: Look how our economies prospered as we went through that period of time. It helped the United States. Incidentally, there are over 7 million Americans who depend directly on trade with Canada in terms of their jobs, and likewise here in Canada, maybe to a lesser extent, because we don't have the same number of people, but that, I think, is the best demonstration of why trade works well.

TOM BEARDEN: The economy isn't the only relationship on Canadians' minds. About 2,800 Canadian troops serve in Afghanistan, more than seven years into the war. More than 100 have been killed, many of them by improvised explosive devices like the one that wrecked this vehicle, now in the Canadian War Museum.

Roland Paris is the director of the Center for International Policy Studies at the University of Ottawa.

ROLAND PARIS, director, Center for International Policy Studies: Canadians have suffered a disproportionately high number of casualties. So the absolute number of casualties as being 108 soldiers and now, in absolute numbers, that might not seem terribly high to an American audience, but it's very high compared to the number of total number of troops that we have serving and also considering the fact that Canada really hasn't been involved in serious ground combat operations since the early 1950s in the Korean War.

So this has been a transformative and wrenching experience for a country that came to view its military as a peacekeeping force.

Involvement in Afghanistan war

TOM BEARDEN: Don Newman is senior parliamentary editor for the Canadian Broadcasting Corporation and host of a nightly program on politics. He says Canada has a long history of participation in international peacekeeping operations, but many Canadians were surprised to find their solders quickly involved in intense ground combat.

DON NEWMAN, Canadian Broadcasting Corporation: I think Canadians have come to the view that, you know, we're peacekeepers and that's what we do. And then suddenly we were in the combat role, and we were somewhat surprised at that.

There's really only four countries fighting very hard in Afghanistan: your country, the United States; Holland; the United Kingdom; and us. And there are 27 countries in NATO. And, you know, I think that's part of it, too, like we've done our share. We're only 30 million people. There are lots of other troops there. And they can have a turn.

TOM BEARDEN: Canada's Parliament has passed legislation to withdraw combat forces in 2011. Even so, some are wondering how the country might react if President Obama were to ask Canada to extend that deadline.

LAWRENCE CANNON: We've committed to as a government our presence, a military combat presence, until 2011. That is the position of the government of Canada, and that is the position that we've taken as parliamentarians, as well.

So that is the strategy, that is the policy that we're putting forward. And I think that it would be premature to talk about any scenarios or speculation as to what might happen.

Eyes on President Obama

TOM BEARDEN: The environment is also on Canada's agenda. The government hopes progress can be made on a joint U.S.-Canadian approach to climate change. But for opposition leader Ignatieff, there's one overwhelming issue that the U.S. and Canada share.

MICHAEL IGNATIEFF: It's the issue of confidence. It's just giving people a feeling that there's light at the end of this tunnel. I think the message that's tremendously important to get across is that, "We're with you."

Our economies are deeply integrated. Our cultures, our traditions are tremendously integrated. And we look to the United States for the hope and optimism and confidence that we need to get out of this recession together.

TOM BEARDEN: The president will only be on the ground for about seven hours. Even so, many Canadians told us they hoped to catch at least a glimpse of the president.

KAARIN HART: We're excited. I'm hoping to maybe go down and be on the trail, too, if he comes to town and if I can get a spot. I'm worried about getting a spot, though.

TOM BEARDEN: Security is expected to be tight. Canadian security agencies have announced traffic and airspace restrictions and will lock down Parliament Hill in the heart of Ottawa.