From Canada, Signs of a Warming Trend

Prime Minister-in-waiting Paul Martin says good neighbors can agree to differ, be it over minor issues like marijuana laws -- or major ones like Iraq

Canada rarely creeps onto the radar screen in Washington these days, except perhaps as a place that exports cheap prescription drugs, embraces same-sex marriage, and wants to decriminalize marijuana. President George W. Bush seems to have more time for Britain's Tony Blair or Russia's Vladimir Putin than for Canadian Prime Minister Jean Chretien. Bush has yet to pay a single state visit to America's largest trading partner (it absorbs 23% of all U.S. exports and is the largest market for 38 states), nor has he invited its Prime Minister to his Texas ranch. It hasn't helped, of course, that Chretien came out against the U.S. invasion of Iraq, and initially stood by a spokeswoman who called Bush a "moron."

Those frosty relations could soon thaw, providing a much-needed catalyst to solve sticky issues ranging from security concerns to trade disputes (see BW Online, 10/24/03, "The U.S. and Canada: Time to Make Up"). On Nov. 15, Chretien's Liberal Party is expected to choose a new leader -- Paul Martin. A Montreal businessman and former Finance Minister who is credited with helping make Canada the strongest-performing economy among the Group of Eight industrial nations in recent years, Martin will become Prime Minister when Chretien steps down in February, if not before.

BusinessWeek Associate Editor Diane Brady recently spoke with Martin about how he plans to lead the country and handle relations with its neighbor to the south. Edited excerpts of their conversation follow:

Q: What are your top priorities when you become Prime Minister?


The Canadian economy has really affected the most remarkable fiscal turnaround of any of the major countries, and we want to go to the next stage. There's no doubt the continuous development of new technology is going to continue to transform the world's economy. This is true in terms of our natural-resources industry. It's true in terms of our capacity to build new products, whether it's in biotechnology, nanotechnology, or, obviously, information technology. We want to ensure that Canada is at the leading edge of the curve.

Second, we want to make sure that, as titanic changes take place with the rise of the Chinese economy or India's economy, Canada is well-placed to take advantage of these changes -- as opposed to simply withstanding them. Those are clearly great economic challenges we face.

One of the great strengths of the Canadian economy is the interrelationship between our economy and our social programs. Our health-care system, while it's certainly under some pressure, is nonetheless a major economic asset to the country. We have to make sure that it, and our education system, continues to be world-class. And the other objective is to make sure that Canada's role in the world is one of great significance.

Q: Would you like to see Canada be less reliant on the U.S. as a trading partner?


There's no doubt that it benefits any country to have a wide diversity of trading partners. From that point of view, obviously [more diversity] would be a good thing. On the other hand, the U.S. has been and will continue to be the most dynamic economy in the world. If you're going to have a neighbor, I would like it to be the U.S.

Q: Have you been satisfied with the tone of the relationship between the two countries' leaders?


Obviously, there have been strains. Clearly, our two countries are going to have differences of opinion and different interests. But we have to recognize that, while each of us is going to stand up for our interests as sovereign nations, we do share a continent and -- more than that -- we have common values. We must never forget that.

Q: Regarding Iraq, Canada distanced itself from both Washington and London. Has that been a concern?


Canada took a different position, but the links between us and the U.S. -- and between us and the United Kingdom -- historically are deep. We differed on that one issue. That doesn't mean that we aren't going to continue to be strong economic and military partners. We're demonstrating that in Afghanistan right now.

Q: Are there particular issues bogging down U.S.-Canada trade?


No doubt about it -- with issues like softwood lumber or the necessity of opening the borders to Canadian meat. Those are important objectives. What they demonstrate to me is that it's important for the heads of the two Administrations -- the Prime Minister and the President -- to get along, albeit each defending their own interests. But it's also important that parliamentarians get along with members of Congress, just as [provincial] premiers must get along with governors of states.

At all levels of society, it's really important for us to understand that, while we are sovereign nations and must respect each other's independence, reaching across the border at all levels of our economy and society is important.

Q: So what do you plan to do on that front?


I'll be very active on this. The Canadian parliamentarians will become much more active in dealing with members of Congress. I certainly intend to encourage Canadian businesses to do the same with their counterparts in the U.S. Obviously, as Prime Minister, I will have a responsibility to make sure that the Canadian view is understood by the U.S. Administration.

Q: The President has not yet made an official state visit to Canada. Is that something that you hope would happen fairly soon after you get into office?


Those are things that will be discussed in due course.

Q: You've said that keeping the border open is a challenge. What are the issues there?


I'm not sure I said it was a challenge. I said it's an absolute necessity. Look, we've got a very high level of integration between the two economies that's heavily dependent on that border being open for trade. There has to be a minimum of impediment.

There is a view that, when you look at the border, Americans look upon it from the point of view of national security and Canadians from the point of view of the national economy. The fact is that Canadians have also got to be very concerned about our security -- and we are, and we will be. I can assure you of that. At the same time, Americans have got to recognize just how important that border is to their national economy. While some people put a security/economy paradigm in there as a difference between the two countries, both of us have great interests in ensuring that both objectives are met.

Q: One thing that has been in the news a lot lately are the more eccentric aspects of Canadian policy, from moves to decriminalize marijuana to legalizing same-sex marriage. Do you think those issues will color relations between the two countries?


Not at all. On the very issues that you're raising, in fact, there are great differences of opinion within the U.S. itself. Opinion is not monolithic.

Q: So what's your opinion on these issues?


Let me give you one example -- the marijuana issue. It is very important to understand that decriminalization is not legalization. What a lot of police will tell you is that they don't believe in giving young people a criminal record because they happen to have been caught with a small amount. They also think it is by far a much greater inhibitor to have a stiff fine, which will be imposed, than criminalization, which will not be imposed. All of this has got to be accompanied by a much tougher effort against those who are growing pot and those who are distributing pot.

Q: What about same-sex marriage?


It's an issue that I've personally had to wrestle with [in terms of acceptance], but I have been supportive of the government's position to the extent that [Canada's] Charter of Rights has said it is a right. Our Charter is a very important part of the Canadian foundation. What tips the balance is really a decision by the courts. That being said, there also has to be extensive debate in Canadian Parliament to look at all the options.

Q: More broadly, do you think the political tone between leaders of the two countries really makes any difference in terms of trade relations?


Yes, it's very important. There are going to be differences of opinion, and the Canadian government must reflect Canadian interests. As those interests are expressed, though, they've got to be expressed against the background of the very great friendship between our two countries. But this isn't something that only exists between two people. It exists between our respective peoples.

Q: What differences, if any, should people in the business community down here expect when you come to office?


Let me tell you. You've seen Canada affect a remarkable fiscal turnaround. That's the start. You just watch us go now.

Edited by Patricia O'Connell

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