While cooperation between Canada and the United States has been poor, there are hopeful signs. In early February 2010, Prime Minister Stephen Harper and President Barack Obama reached a deal that opens the way for free trade and reciprocity in government procurement programs for public works. It should encourage free traders on both sides of the line to continue pressing for deeper economic cooperation.

This report explains that Canada-US relations are reeling from a double blow. The first blow came with the attacks by Al Qaeda on American soil, compelling the Americans to change their minds about our shared border. Although we share intelligence and electronic custom reports, the fact remains that we are essentially constructing a border that is reducing trade, investment, and tourism.

The second wave of trouble came in the wake of the financial crisis that started in late summer of 2008 and the ensuing recession of 2009. Washington's response to the economic challenge has been to feed various protectionist sentiments. We saw it in the "Buy American" provision. We also see it in the recent implementation of Country of Origin Labeling (COOL) on food products and newly emerging plans to apply COOL to ethanol-based fuel. The most devastating impact on Canada's trade would emerge if the United States should proceed with legislation aimed at carbon-dioxide emissions and so-called "dirty fuel" regulations. Given current uncertainty in the US political system on this issue, Canada must resist the temptation to move ahead with its own greenhouse gas measures.