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Canada getting trapped in U.S. election-year security fears, say analysts
April 28, 2006, canadian press

WASHINGTON -- In a U.S. election year, it’s all about security. And Canada’s getting caught in the crossfire.

While the plan to require passports of cross-border travellers is the top troublesome issue, there are other moves south of the border making Canadian officials and business groups nervous.

Congress, returning from a two-week break this week, will consider legislation that could hold up Canadian cargo at the border after a terrorist strike. And some legislators want to impose major limits on foreign investment in the name of safety.

There’s no doubt U.S. politicians are under pressure to address the concerns of Americans who will decide this fall in mid-term races whether to re-elect them.

And the furor over a deal that would have allowed a firm in the United Arab Emirates to manage six major U.S. ports provided plenty of evidence that voters are plenty worried about foreign ownership.

But some observers say legislators are taking advantage of security fears and neglecting the impact on trade.

"We seem to have come to the end of exceptions for Canada," said Chris Sands, an analyst at the Center for Strategic and International Studies.

"It’s an increasingly protectionist Congress. It’s one-size fits all. Canada has to fit into the same box as everyone else. There isn’t that bank of goodwill. But Canada needs to be considered separately in a lot of these cases."

Canadian embassy officials, fearing a repeat of border closings that created havoc on Sept. 11, 2001, have been lobbying against port security bills in the House of Representatives and Senate that could shut down container traffic.

Inspection provisions in both bills don’t distinguish between goods from the north, which are all heavily screened with gamma ray technology before they hit the border, and those arriving in the United States by sea from foreign ports.

"It rang all sorts of alarm bells," said one official. "It could stop container traffic for quite some time."

"We don’t think that those decisions were taken with a full understanding of the amount of security that is in place now in Canada," said Ambassador Michael Wilson. `We have done a lot to track containers from the point of origin."

The issue is particularly worrisome for Canadian National and Canadian Pacific railways that carry much of the cargo.

Both have been working Capitol Hill to educate legislators about what’s already being done to ensure safety.

"We’re very hopeful that as people get more information on everything that’s taking place, we’ll see a final bill come out that will satisfy our concerns," said Karen Hughes, CN’s vice-president for government affairs.

Meanwhile, Canadian companies are assessing the potential impact of protectionist bills introduced after the Dubai Ports World fiasco, where public outrage killed a deal to allow the foreign company to manage U.S. ports.

There was also a major backlash last year against a bid by the Chinese oil company CNOOC for U.S.-based Unocal.

A House bill introduced by California’s Duncan Hunter would set major foreign limits on assets deemed to be part of the critical U.S. infrastructure, like bridges, railways, chemical plants and telecommunications companies.

There’s no distinction between Canada and other countries like China or Saudi Arabia.

"We have what I call a knee-jerk reaction," said James Phillips, head of the Canadian-American Border Trade Alliance.

"The politicians are reacting to the perception of the people who vote. It’s very critical one understand emotion versus reality. Common sense must prevail in the end," said Phillips.

"If you close the country so the quality of life goes down, that’s not protecting your children or your grandchildren."

Some U.S. media organizations have blasted Hunter’s bill, saying it unfairly penalizes foreigners and doesn’t consider longtime allies like Canada with significant investments in the country.

"We’re just going to keep working on this as it evolves," said Hughes. "We certainly want to make sure we continue to operate."

Shirley-Ann George, vice-president at the Canadian Chamber of Commerce, said the legislation could cause big problems since there are many publicly traded companies with infrastructure holdings in both countries.

"This is potentially of great impact," said George.

"It seems there’s an unfortunate backlash that might not be proportionate to the risk."