Stephen Harper placed a congratulatory call to Barack Obama to urge the re-elected president to work with Congress on resolving a looming “fiscal cliff” battle over taxes and spending that risks sending the United States back into recession.
The Canadian Prime Minister, who was in Bangalore, India, at the end of a major trade trip, used the 10-minute phone conversation to convey to the president the importance of the White House and Congress working together to tackle the U.S. fiscal situation, his office said.
Mr. Harper made the call from his hotel room in the southern Indian city, his offce said.
In separate comments Thursday, the prime minister sounded a bearish note on the U.S. – Canada’s largest trading partner – and said it’s one more reason why he’s trying to reduce this country’s reliance on exports to the United States.
“The reality is the United States, while it will remain our largest economic partner for the foreseeable future, it’s likely to continue to be a slow growing economy and [Canada], to realize its full economic potential, has to diversify to markets like India that are expected to grow much more rapidly,” he said.
Earlier Thursday Mr. Harper registered serious concern with reporters over the close to $500-billion in U.S. tax hikes and spending cuts scheduled to take effect in January.
A slew of tax cut expire on Dec. 31, 2012 including George W. Bush-era income tax reductions while at the same time some taxes related to President Obama’s health care law also take effect. Meanwhile, deep spending reductions stemming from the 2011 debt ceiling deal will hit federal departments.
Analysts predict the combined impact of the tax hikes and spending cuts will stall the economy.
“The world would be immensely helped if the Americans could deal with this immediate issue and the Europeans could accelerate progress on their debt issue,” Mr. Harper told reporters Thursday.
The Prime Minister also said he’s still not certain whether Mr. Obama will back the Keystone pipeline project that would carry Alberta oilsands crude to the U.S. Gulf Coast. The Democratic president delayed approval for the pipeline until after the Nov. 6 election but Mr. Harper made it clear he’s not assuming that the Obama White House will eventually back the deal. “He has said repeatedly to us that he has not made a decision on the project,” Mr. Harper said.
He said this is why Canada has to shift trade away from the United States and towards more rapidly-growing emerging markets such as India.
Canada’s been frustrated by the slow pace of negotiations with India on deals to open markets for Canadian goods and to obtain legal protections for investors there. Officials have privately complained about Indian negotiators concluding discussions on trade matters only to reopen them later.
Mr. Harper, who this week urged India in a speech to work harder and faster on trade deals, on Thursday said he realized New Delhi was proceeding as fast as it could.
“Are we frustated? I am very clear we need to go farther and faster,” the prime minister told reporters in Bangalore after celebrating the opening of an IMAX cinema.
“In my conversations with Indian leaders, they reflect exactly the same thing.”
He said Indian politicians share his concern but are hamstrung by a coalition government and the need to win approval from partners.
“What we do have to realize when we deal with India as opposed to some other countries we’re dealing with in the developing word: this country is a democracy,” the prime minister said.
“And that means governments cannot simply dictate a whole set of policy changes to happen the next day. That means governments must develop public consensus behind policy change.”