C~ADA page 4 of 24.

programs through 2009.

Fi~ally, Canada has pledged to deploy

a Prcvincial Reconstruction 7eam, possibly to ~~andahar, in the fall of 2005.

11. (C) In Haiti, Canada has provided civilian police officers, a sizable aid budget. and positive involvement in diplo;natic efforts on the ground. Canada has been largely in synch with our efforts to seek a durable sol~tion to Sudan,s cuxxent; and chronic crisis. PM !'-lartin, who met with President:. al-Bashir in Sudan la.st week, supports the &responsibility to protectS as an obligation of each governmen~ a!ld a core function of the international community through the United Nations. Canada his allocated US$16 million to support the .Z;..frican Union in Sudan.

12. (SBU) Despite oppositicn to our invasion of Iraq, Canad.a has offered strong support for Iraqi reconstruction, saying "we can I t afford to fail." The GOC quickly commi teed funds. pledging about US$ 240 million in Madrid, and made active efforts to leverage contributions from countries that· were initially hesitant. OVer tW'o-thirds of Canada I s aid has been allocated and over half has been disbursed on proj eets such as police trainers in Jordan. Canada also supports Paris Club efforts on debt reduction.

Trade and the Border., Vital Li.nks for Canada

13. (SEU) The U.S. and Canada have the largest bilateral trade relationship in the history 0"£ the world and over 95%of that trade is trouble-free. The billion dollars a day in trade with the U.S. generates about a third of Canada,s GDP, with energy expor-t.s' and. the integrated North American auto

industry dominating the picture. .

14. (SEU) Since implementation of NAFTA ten years ago, US-Canada trade has doubled. Most canadians see NAFTA as a success bu.t are frustra1:.ed hy its lim.i..t.s, t.hrown into relief by U.S. trade remedyact.ions on softwood lumber and pork. Expectations that NAFTA would give ~anadian5 greater control over us actions have largely been disappointed. The softwood case remains a long-r~ing and intractable irritant; even so, Canadian lumber exports boomed last year in response to us housing demand.

15. (SBU) There are trade disputes and then there is beef. Reopening the border to trade in live cattle is Canada's most pressing bilateral concern ~~d our· top priority for this

visi t. Cut out of our highly integrated North J!..merican market since 2003, Cauadian ranchers have lost over $2 billion to date. Canada has spent. $.400 million on .relief f o r the cattle industry, but many f~rmers and their suppliers may not survive another winter. Indefinite delays and the perceived unpredictability of the U.S. re~ulatory process have soured views of the U.s. in some of the most traditionally pro-American regions of Canada. Issuance of the new rule, or at least a firm commitment to a date for completion. would help restore p':lblic confidence and give the

CANADA page 5 of 24

Goe some political room·tc respond to o~her O:S. priorities. In the long term, failure to resolve the problem will result in t.wo North American beef industries, reducing efficiencies and stiffening competition in traditional US expor t markets. Significantly, rnov-eme nt; on beef will give Mart.in political space to cooperate more on security.

l6. (U) Canada enjoys an enviable economic situation, with steady budget surpluses arid the most sharply~reduced debt burden in the G~7. Although the economic outlook is rosy, the currency's rapid appreciation against the U.S dollar, driven partly by rising commodity prices, could put a damper on export s , and t.her e are cone e rns here a bout global imbalances and the sustaiaability of the U.S. economic recovery. Even. wi th strong economic fundamentals, Canadian GDP growth is projec.ted to lag that of the O. S. in 2004.

17. (U) In addition to worries about exchange rate risk and perennial trade disputes, Ca.nadians feel increaSingly vulnerable to &border riskS. Exporters worry about lengthe!1ing border delays due to infrastructure overload and to t~ghter security measures s'u ch <15 prior notice requirements. 1o.pplication of USVTSIT fingerprint and photo requirements to Canadian non~citizen residents, and the possibility that eventually Canadians will require passports ,to enter the U. S., have sparked public anxiety among Canadians. Businesses fear that future. terrorist incidents could lead to catastrophic border closings and strongly support the Goe,s efforts to strengthen bilateral security cooperation. Continued DRS engagement with Canada via the Smart Border }I..ction plan, the Ridge~McLellan dialogue, and regular workiDg~level me~tings. is a key element in managing this anxiety and addressing underlying problems. The GoC is pushing to 2.cce.lerate progress anc;l add to the &Smart

Border8 agenda in its version .of the North American Initiative, &Eeyond Smart Borders8.

Energy Int er ~ Dependency

18. (UJ Canada is by .far the Uni ted States' largest foreign sou~ce of energy, It is our largest supplier of petroleum, as well as our leading external source of natural gas, uranium, and electric power. With Alberta, s oil sands now classif ied as &proven reserves, 8 Canada, s petroleum resources of 180 billion barrels are second .only to saudi Arabia,s.

19. (0) Canada, s northern territories contain large energy resources, notably natural gas depos:i,ts in the delta of t.he Ma cken z i e River, se vera 1 hur-dred mil e seas t of Alaska, s Prudhoe Bay. The energy inaustry expe c t.s that two g.as pipelines will be built, one from the Mackenzie Delta and the other 'from Alaska, s North Slope. As the regulatory

framework for the Alaska line deve Lops., industry will have to determine the pipeline, s exact route both in Alaska and as

CAt'lADA page 6 of 24

it passes through Canada.

20. (V) Caria da ' s electric power sector is iuterconnected at numerous points with t:he U.S. grid and has for decades been a large supplier of powe r to the u. S. market. The U. S .,/Canada Joint Task Force that investigated the August 2003 powe r outage recommended the creation of a North American Electric Reliability Organization, which would implement mandatory standards for electricity transmission in both countries. Canadian players in this incustry are intensely interested in the shape of proposed U.S. energy legislation, as it affects their future strategies.

Environment,,"l Issues

21. (U) The u.s. and C~qada cooperate closely on a broad range of environmental issues. Together we have made significant progress on key issues, including trans-boundary air and water pollution, regulation of pesticides and chemicals and protection of the Great Lakes.

22. (e) There are, however, a number of thorny cross-border ·"'p.ter issues still unresolved, including Canadian demands thac the u.s. move a derelict fishing vessel (Victoria Ml mistakenly acc.t t Led in Caria d.i an waters, controversy over the proposed c Le ari+up of pO'llution of the Columbia River from a Canadian smelter .i.n British Co Lumo La and Nort.h Dakota, s plans to mi,tigate flooding at Devils Lak.e by pumping wa t e r through a canal system to the Red River.

23. (Cl The Canadians have raised these issues before at senior levels and are likely to do so again _ The mos't pressing of these problems is Devils Lak.e, where Caria da believes thac the state outlet fiom the lake to the Red River would violate the 30undary Wa.ters Treaty. North Dakota has almost completed .its canal system and plans to start pumping water in the spring of 2005. Canada has asked for U. S. agreement to &~efer8 this issue to the International Joint Commission for study and recommendations, but. we have not yet responded to that reCfuest. The Embassy believes it would be in our interest to agree to a &reference, B tightly limited

in scope and time-frame.

24. (U) Canada formally ratified the Kyoto Accord at the end of 2002, despite vocal 'opposition from some provincial governments and indust.ries. l'I'hile political approaches to th.e climat.e change issue have differed between the U.S. and Canada, practical cooperation has been close. In 2002, we signed agreements on Renewable Epergy and Climate. Science, and formed a bilateral Working Group aD Climate Ch~nge. Few Canadians' understand just how much we do on climate change, reducing U.S. efforts only to Kyoto. Canada participates in several U.S.-led multilateral initiatives, such as the Carbon Sequestration Leadership Forum ~qd the Intern2tional Partnership for the Hydrogen Economy. J.;'e expect tha.t they

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v i 11 soon j 0 i n t.he !1ethane to Herk~ t s I'an:ner ship.

Visit Canada's Clas!1ifie:i Web Site at

. ,

lItt?: I /1I.y-"" . s t at.e , sgov. gov /p/;.,'ha/ot t awa

Michele L Stovall 03/19/2009 01:02:01 PM From DB/lnbox: Michele L Stovall

Cable Text:

CON F IDE N T I A L cxottawa:

ACTION: POL

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INFO:

ECON DAO PA ArJIB DCM DHS LIA

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CON F IDE N T I A L SECTION 01 OF 02 OTTAWA 000064

SIPDIS

FOR PRESIDENT OBAMA FROM CHARGE D'AFFAIRES BREESE

E.O. 12958: DECL: 01/22/2019

TAGS: PREL ,. ETRD, ECON, MARR, SENV, AF, CA

SUBJECT: SCENESETTER FOR THE PRESIDENT'S TRIP TO OTTAWA

Classified By: Charge d'Affaires Terry A. Breese, reason 1.4 (dl

1. (Cl Mr. President, Mission Canada warmly welcomes you and the First Lady to Ottawa. We and Canadians alike are thrilled that your first foreign trip· as President will be to Canada, which Canadians claim as a long-standing tradition reflecting the vital importance of this bilateral relationship between two democratic neighbors.

SOME HOME TRUTHS

2. (el Your enormous popularity among Canadians (an 81 pet approval rating) is to Conservative Prime Minister Stephen Harper bot.h a blessing - - because he can for the first time

since taking office in 2006 gain politically from public and policy association with the U.S. President -- and a curse because no Canadian politician of any stripe is nearly as popular, respected, or inspiring as you are to Canadian voters, a genuine factor in the historically low turnout in the October 2008 Canadian federal election. Many Canadians, especially university students, volunteered art your campaign, and busloads traveled to Washington for your inauguration.

3. (e) Your decision to make Ottawa your first foreign destination as President will do much to diminish -temporarily, at least -- Canada's habitual inferiority complex vis-a-vis the u.s. and its chronic but accurate complaint that the u.s. pays far less attention to Canada than Canada does to us.

4. (C) The minority status in Parliament of Harper's Conservative Party means that it and all other parties now remain in almost permanent campaign mode; there have been three successive minority governments (one Liberal, two Conservative). The bottom line questions remain when the government will fall and on what issue. Your trip will help to ensure that the government will survive an early February vote of confidence on the federal budget, in which Canada

,will post its first deficit in more than a decade as it provides a stimulus package of $30-40 billion.

5. (C) The U. s. and Canada enjoy the world's largest trading relationship, with more than $1.5 billion in two-way trade crossing the border each day, including 77 pet of all Canadian exports. With the border central to Canada's economic well being, Canadians chafe about what they see as a "thickening of the border" caused by u.s. actions to strengthen homeland security since 9/11. Canadians claim .that these measures have driven up business costs and delayed border crOBsers. The business and trade communities in the u.s. and Canada both believe that the "balance" between trade and security has been tilted too far toward security, and are hopeful that your administration will tilt that balance back.

Canada may argue for a new mechanism (separate from the trilateral Security and Prosperity Partn~rship) to address bilateral concerns.

6. (C) Canadians wish that more Americans would recognize that Canada is the largest source of imported energy for the u.s. (including for both oil and natural gas) t although there is also keen sensitivity over the higher environmental footprint of oil from western Canada's oil sands and concern about the implications for Canada of your energetic calls to develop renewable energies· and reduce our reliance on imported oil. Canada is also rich in hydroelectric power, has similar objectives for developing renewables, and is working strenuously to improve the environmental impact of production from the oil sands and to expand its own wind

power capacity.

7. (e) Given the high integration of our two economies, Canada will hope for a truly North American discussion of economic stimulus. job creation, and sectoral support, as in coordinated bilateral measures on the auto sector (for which Canada promised a $3.4 billion assistance plart -- 20 pet of what the u.s. offered. matching a pledge that PM Harper made to then-President Bush in December) and in the G-20 commitments on financial sector regulation. We should ensure that both nations continue to design complementary packages to revive our economies.

8. (e) Although the climate change issue has largely been the province of the official opposition Liberal Party, the Conservative government .riow seeks to set in place measures to reduce greenhouse gas emissions and advocates a_ coordinated policy with the u.s. on expanded efforts to protect our shared environment. They hope and expect this will be a central theme of your visit.

9. (C) Arctic sovereignty is a motherhood-and-apple-pie issue for Canadia.ns of all political persuasions. and they are deeply suspicious of assertions by the u.s. (and most

,other concerned nations) that the Northwest Passage is a strait for Lnt.e rriat Lona.L navigation, not Canada's territorial sea. The new Arctic policy issued at the end of the Bush Administration. which reasserted our views on the Northwest Passage and emphasized cooperation among Arctic nations, has re-ignited these suspicions.

10. (C) Canada declined to join the u.s. in the invasion of Iraq and instead concentrated its global counterterrorism efforts on Afghanistan, including 2500 troops in Kandahar Province and its largest bilateral donor program worldwide. With the highest casualty rate among NATO partners and only about 65,000 Canadian Forces overall, there is virtually zero willingness across the Canadian political spectrum to extend the current Parliamentary mandate for these forces in Afghanistan beyond 2011, but Canada could offer up significant new funding to strengthen the Afghan National Army and Afghan National Police. Much will depend upon convincing Canada that its continued contributions to the Afgh~nistan effort are a critical component of your strategy for success in Afghanistan.

11. (C) No matt-er which political party forms the Canadian

government during your Administration. Canada will remain one of our staunchest and most like-minded of allies, our largest tradi;ng and energy partner, and our most reliable neighbor and friend.

KEY THEMES

12. (SBU) In your public remarks and media availability, these points would be most useful from Mission Canada's perspective;

Canada is a true friend, trusted ally, valued trading partner, and democratic model for the world; i

around the world, the u.s. and Canada are working together to defeat terrorism, promote economic development through trade and investment, prevent the proliferation of weapons of mass .des'truction, and advance the cause of human freedom and dignity;

Canada and the u.s. are blessed to share the beauties and riches of North America, and will strive individually and jointly to protect and preserve its environment, while ensuring that our nations and the world benefit from its extensive natural and human resources;

our highly integrated economies are now facing enormous challenges, but with our traditional resilience, creativity, sacrifice, and cooperation, our two countries will emerge from this crisis stronger than ever;

while w~ share the prosperity that comes with the world's largest bilateral trade relationship, we also share the threats to that prosperity from international terrorism;

21st century technology can help ensure ever more safe and efficient transit of goods and people across this longest undefended border in the world, and we need to work together more fully to understand each other's security and trade needs and to build a shared vision for the security of our t.wo nations from new threats while investing in technology and infrastructure that can secure, support, and expand the benefits of our trade;

the u.s. and Canada maintain extensive cooperation in the Arctic. The U.S. views the Northwest Passage as a strait used for international navigation -- not Canada's territorial sea -- but does not dispute Canada's sovereignty over its Arctic islands;

Canada has pa'i d a disproportionately high price in human life to help the people of Afghanistan emerge from their dark era under the Taliban, and the u.s. salutes these Canadian contributions to the building of a democratic and successful society in that troubled Land and counts on continued Canadian cooperation to achiev~ this goal;

U.s. Presidents and Canadian Prime Ministers come and go, but our shared values and aspirations will continue to underpin a robust, mutually respectful, and hugely successful friendship and partnership that benefits not only our two peoples but the world.

Visit Canada,s Economy and Environment Forum at http://www.intelink.gov/communities/state/canada

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