A PARTNER IN TRANSFORMATION - YOUR VISIT TO

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
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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 . . .
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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
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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
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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
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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
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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