U.S. needs us as much as we need them

www.globeandmail.com By MICHAEL DEN TANDT Thursday, January 30, 2003 – Page B2

There can be no doubt now that U.S. President George W. Bush intends to make war on Iraq. How long the conflict lasts, or where it will lead, is anyone's guess.

Where will Canada stand? We don't know. The reason we don't know is that Prime Minister Jean Chrétien hasn't told us. The reason he hasn't told us is that -- much as he might like to flatly rule out Canada's taking part, absent unshakeable evidence of Iraqi weapons of mass destruction, and of an active alliance between Saddam Hussein and al-Qaeda -- he's afraid. And the reason he's afraid is that the United States is Canada's meal ticket.

Close the Canada-U.S. border, and 85 per cent of our exports have no home. Trade worth $2-billion a day evaporates. Thirty per cent of our gross domestic product goes down the tubes. Suddenly, we're beyond the American perimeter looking in, faces pressed to the glass. And it's cold out there. Imagine the lumber dispute, writ large.

Granted, no one in the Bush administration has even hinted at such measures, regardless of Canada's position on Iraq. But what if there were further terrorist attacks on the U.S. mainland? Hillary Clinton, the Democratic Senator from New York, did not take up Canada-bashing in a vacuum. She reflects a certain constituency. By the end of next year, the U.S. Immigration and Naturalization Service intends to register every person who crosses the border. Anyone can see the way the wind is blowing. We're sleeping with an elephant, and it is angry. Better tread softly and avoid giving offence.

But there's another way of seeing this, and here it is: The United States needs an open border as much as we do. It needs our lumber, our minerals, our car parts, and our energy. We are by far its largest export market -- larger than Japan, larger than all 15 European Union countries combined. If the trading relationship soured, Canada wouldn't suffer alone. South of the border, car plants would close, gasoline prices would soar. Thirty-seven states would lose their largest foreign customer. Recession would come quickly and brutally, and it would make the current economic malaise in the United States pale in comparison. That's not in Mr. Bush's interests, and he knows it.

Think of it this way. In 2001, the total value of Canada-U.S. exchange was $445-billion (U.S.) -- 61 per cent greater than the United States' trade with Mexico, the second-largest U.S. trading partner. That year, according to Canadian government figures, we bought $163-billion worth of U.S. goods. That's about $5,254 for each Canadian. U.S. exports to Ontario alone were worth nearly double those to Japan.

Break the numbers down state by state, and the results are startling. For example, 54 per cent of Michigan's foreign exports in 2001 went to Canada. The bulk of that, worth $8.7-billion, was in auto parts and components, but not all. We also bought $2.7-billion worth of Michigan-made cars, about a billion worth of her trucks, and a cool $4-billion in assorted chemicals, metals, machinery and other industrial equipment.

Or take New York: In 2001, Canada bought 23 per cent of the state's foreign exports -- worth $9.6-billion. About $1.4-billion of that was in car engines and parts. But we also purchased major quantities of telecom equipment ($1-billion), household goods ($1-billion), machinery ($591-million), chemicals $473-million) and agricultural products ($386-million). Where would Mrs. Clinton be, one wonders, if the jobs provided by those industries started to disappear? Across the American heartland, it's the same story. South Carolina, Alabama, Colorado, Arkansas -- all rely on Canada as their key foreign market. Now, some may say, big deal: U.S. states trade far more among themselves than they do with foreigners. True. But nevertheless, exports last year accounted for nearly 10 per cent of U.S. GDP.

And that's setting aside U.S. economic need for our exports -- lumber, car parts, and most important, oil. According to 2002 figures from the U.S. Energy Information Agency, Canada supplies 17 per cent of U.S. foreign crude supply. Saudi Arabia accounts for 13.9 per cent. Venezuela, before the general strike that sent U.S. oil inventories to 25-year lows, supplied about the same amount as the Saudis.

This is not to say that Canada would, or should, wield trade as a cudgel. But nor should Canadians assume that we must toe the American line, regardless of what we think is right, for the sake of bread and butter. Ottawa does have leverage -- enough to chart an independent course.