Ottawa/Vancouver — Business fears that the political rift between Canada and the United States over Iraq could hurt commercial relations were heightened yesterday after U.S. ambassador Paul Cellucci said Ottawa's decision to sit out the war may strain relations between the world's two largest trading partners.
Business groups say they fear a political rift between Canada and the United States could hurt cross-border commercial relationships and sink the chances of negotiating settlements to urgent trade battles such as the lengthy $10-billion softwood lumber conflict.
"We can't take [our trading relationship] for granted," Canadian Chamber of Commerce president Nancy Hughes Anthony said yesterday.
"Our car plants can be replaced by Mexican car plants in short order," she said. "We do have to appreciate that this is a package deal here, that with the economic advantage of being north of the border comes also the kind of duty and responsibility of standing up for your friends in hard times."
Corporate Canada says it's not challenging Ottawa's refusal to send troops to Iraq, but rather how poorly the Liberal government handled the matter, including the manner and tone with which it broke with Washington.
Prime Minister Jean Chrétien appeared to waffle on military involvement in Iraq for months before making an 11th-hour decision sit out the war. And members of the ruling Liberal party have taken several high-profile shots at Americans in recent months, calling President George W. Bush a "moron" and a failed statesman and professing hatred for "damn Americans ... those bastards" over Iraq.
"I think it is the tone from the top and manner [of] talking to our best friend here that is really at an all time low," Ms. Hughes Anthony said.
"I think it is the tone from the top and manner [of] talking to our best friend here that is really at an all time low," Ms. Hughes Anthony said.
She said Mr. Cellucci's comments are a wake-up call for Canada.
"The government has to listen to this. Mr. Cellucci chose his words very deliberately. I think clearly that was a message directly from Washington."
Mr. Cellucci told a Toronto business audience yesterday that "there is a lot of disappointment in Washington and a lot of people are upset" about Canada's refusal to join the United States in its efforts to depose Iraqi President Saddam Hussein.
While the relationship between the two countries will endure in the long term, he said, "there may be short-term strains here."
Asked what those strains will be, Mr. Cellucci replied: "You'll have to wait and see." He added that it is his government's position that "security will trump trade," implying possible ramifications for cross-border traffic.
Toronto trade lawyer Larry Herman said Ottawa's decision to skip the war in Iraq has depleted the reservoir of goodwill toward Canada in Washington — a move that will make it much harder to negotiate settlements to trade fights.
"Our political capital in Washington has been devalued. There are repercussions," he said. "We have to expect when Canada takes political positions on global issues such as this — it will have an impact."
He said Ottawa's influence in the United States has suffered, too.
"It is quite clear that our ability to settle matters [such as the softwood dispute] in the trade area at the political level has been weakened regardless of what the current government in Ottawa says."
Thomas d'Aquino with the Canadian Council of Chief Executives said the fear is the chilly Ottawa-Washington relations could have a "negative effect" on $2-billion a day of business between the two countries if things don't improve.
"Is a negative impact on $2-billion a day of business ... important? Damn right it's important," Mr. d'Aquino said.
One fear is U.S. customers start turning elsewhere for business where possible.
Mr. d'Aquino said the frosty relationship threatens to make "millions of microtransactions going across the border" more difficult.
He said Corporate Canada is so concerned about possible fallout for business from cooling cross-border relations that nearly 100 chief executive officers have signed up to attend a one-day CCCE members' meeting with U.S. decision makers this April in Washington.
Andrew Card, Mr. Bush's chief of staff, will also be there.
"Listen, you won't find anywhere at any [other] time that close to one hundred chief executives get on airplanes and go to Washington for a 24-hour meeting," Mr. d'Aquino said.
"We see this frankly as an opportunity to begin to mend some fences because the fences are in quite bad shape."
According to CCCE, executives scheduled to attend the meeting include David Emerson of Canfor Corp., Paul Desmarais Jr. of Power Corp., Milton Harris of Harris Steel Group Inc., Richard George of Suncor Energy Inc.; David Kerr of Noranda Inc.; Gwyn Morgan with EnCana Corp. and Paul Tellier with Bombardier Inc.
Trade Minister Pierre Pettigrew rejected the suggestion that Canada's stand on the war will affect commercial relations.
"I was impressed by how positive he is about this relationship," Mr. Pettigrew said of Mr. Cellucci's speech in Toronto.
He said he's not surprised if some in the Bush administration are disappointed in Ottawa's position but believes it will have minimal influence.
However, John Weaver, CEO of Montreal newsprint giant Abitibi-Consolidated Inc., said that Canada's failure to line up beside the United States in Iraq could make it more difficult to resolve the softwood lumber dispute.
"I don't think it is going to make it any easier that's for sure," said Mr. Weaver, who was attending a forestry conference in Vancouver yesterday.
"When you have disagreements in the way, it is always harder to sort things out."
With files from reporter Gloria Galloway
