Obama's Second Term - What Does It Mean for Canada?

CALGARY, Jan. 17, 2013 /CNW/ - Barack Obama will be sworn in for his second term on Monday, January 21, 2013. So, what can the world expect from his second term, and do current U.S. fiscal troubles mean that Canada should move away from its longstanding dependence on trade with the U.S.?

Despite the volumes that have been written on "fiscal cliff" and debt issues, author John M. Curtis sees the U.S. as a beacon of growth and economic opportunity in the medium term, and rather than becoming less important to Canada, will likely become more important.  "Canada-U.S. cross-border activity will expand over the coming four years; the currently repressed share of 75 per cent of total Canadian merchandise exports going to the U.S. is probably at a cyclical low," said Dr. Curtis today.

Internationally, despite an array of foreign economic policy issues floating about - including reform to the governance structure of the IMF, tougher financial regulations and a post-Kyoto climate change treaty, among others - the U.S. is unlikely to show any concerted leadership toward these issues and will focus on incremental change, Curtis argues. However, two exceptions to the incremental approach will be the Trans-Pacific Partnership (TPP) and dependency on Middle East oil - both of which have a huge impact on Canada. All the more reason that Canada needs to ensure a strong, trade-focused relationship with the U.S.

Curtis argues that the TPP has become and will continue to be "Washington's top international economic priority." A great deal of effort will be spent driving this initiative forward over the next four years. The author even goes as far as saying that "it will supplement and possibly even replace the Canada-U.S.-Mexico NAFTA."

The author also contends that the U.S. will quietly go about creating a stable oil price - neither too high nor too low - to both protect its economy and protect its allies in the Middle East and further afield from economic disruption.

Overall, while it is important for Canada to diversify export markets, we should not take our eye off the ball in terms of trade with what will continue to be the world's largest and most dynamic economy.

The report can be found at www.policyschool.ucalgary.ca/publications

SOURCE: The School of Public Policy - University of Calgary

Media Contact:

Morten Paulsen
Phone: [phone]
Email: [email protected]