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Fear factor in U.S. election casting shadow on ties with Canada

Earl Fry is director of Canadian studies at Brigham Young University in Provo, Utah, and a former special assistant in the Office of the U.S. Trade Representative.

When Prime Minister Justin Trudeau spoke to the UN General Assembly last month, he stated that "fear has never created a single job or fed a single family." Unfortunately, this is not the case in the United States where a million jobs have been created as a result of the "fear" industry that has surged since the terrorist attacks of Sept. 11, 2001.

Along the Canada-U.S. border, thousands of jobs have been created because of the fear that terrorists will descend on the United States from Canadian soil (something that Hillary Clinton, Newt Gingrich and Janet Napolitano, then-director of the Department of Homeland Security, wrongly perceived had transpired on 9/11).

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Governor Scott Walker of Wisconsin last year said that the idea of building a wall along the border might be worth considering. Other border-state representatives have called for an increase in military personnel and U.S. Customs and Border Protection agents. One suspects that these officials are playing to the fear factor, and also hope to attract well-paying federal security jobs to their border regions.

The spectre of a Donald Trump presidency must also frighten many Canadians, because Canada and Mexico would be the two major foreign victims if his rhetoric is transformed into actual policy. First, he might terminate the North American free-trade agreement. Second, Mr. Trump's proposed 35-per-cent tariff on auto makers that partly assemble cars in Canada and Mexico and sell them in the United States would effectively end cross-border joint production enshrined in the 1965 Canada-U.S. Auto Pact. Third, he would label Canada as a NATO "freeloader" because Ottawa spends only 1 per cent of GDP on defence. However, there might be one positive: Mr. Trump has voiced support for completion of the Keystone XL pipeline from Alberta to Texas.

Even if Ms. Clinton wins the Oval Office, Canada may suffer. This election is the most protectionist since Herbert Hoover secured the presidency in 1928. Mr. Hoover pushed vigorously for the protection of agricultural goods, and in 1930 signed the infamous Smoot-Hawley Tariff Act which raised import duties to an average of 40 per cent. This year, both Republicans and Democrats are riding the protectionist bandwagon; Ms. Clinton had reversed her support of NAFTA, has turned thumbs down to the Trans-Pacific Partnership, and voiced her suspicion of global trade accords in general.

What is at risk for Canada? Currently, two-way trade in goods and services is worth about $2.4-billion a day; and about 400,000 people cross the joint border daily. Ottawa is hoping that a trade deal with the European Union will soon be ratified, but Canada sent only about 7 per cent of its total merchandise exports to the EU in 2015 – a drop in the bucket when compared with the 75 per cent sent to the United States.

As well, Canada is the fourth-biggest global destination for U.S. foreign direct investment, and Canadian subsidiaries of U.S. companies provided 1.2 million jobs in Canada in 2013. If Mr. Trump were to end NAFTA, a good portion of these jobs could leave Canada as supply chain arrangements would be dismantled, especially in the auto sector.

Cross-border visits, and tourist dollars, could also suffer in an era of renewed uncertainty. In 2015, 21 million visits were made by Canadian residents to the United States, compared with only 12.5 million visits by Americans to Canada, a striking disparity given that the U.S. population is more than nine times the size of Canada's. Before 9/11, Canadians and Americans used to be able to cross the joint border without passports, but that ended in 2007 with the U.S.-imposed Western Hemisphere Travel Initiative. Currently, only about 40 per cent of Americans have a passport that would let them enter Canada and then return home.

Fifteen years after 9/11, a bunker mentality persists in the United States. Protectionism is combining with the fear factor to create a very unsettling presidential campaign. On Nov. 8, Ms. Clinton will likely win, and then may pivot back toward the centre. Nevertheless, this is a very worrisome period for Canada-U.S. relations.

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