How the U.S. midterm elections might change the conversation between Ottawa and Washington

While the U.S. midterm elections could change the political landscape in Washington, experts say they're unlikely to have much of an impact on Canada-U.S. relations although they could shiftthe discussionon some key issues.

The midterms electone-third of the U.S. Senate and the entire House of Representatives, both of which arecurrently under Democratic control.

Election forecasters view Republicans as overwhelming favourites to win back the House of Representatives and, increasingly, as slight favourites forregainingthe Senate.

But no matter which partyholdsthe balance of power in Congress after the votes are counted, any shift in powerwill have little impact on relations between Washington and Ottawa.

"There really isn't a partisan divide on Canada," said Chris Sands, head of the Canada Institute at the Wilson Center,a Washington-based think tank.

"The desire for good relations with Canada and to work things out and to occasionally have a serious conversation is pretty consistent and ... the composition of the Congress won't likely change that."

Maryscott Greenwood, head of the Canadian-American Business Council, pointed out that the U.S.-Mexico-Canada Agreement trade pact, referred to in Canada as CUSMA, was ratified with a Republican in the White House and aHouse of Representatives controlled byDemocrats.

"No matter what happens, there will be a lot of new faces in Congress and it's incumbent upon Canada to introduce the Canadian American relationship to these new members," Greenwood said.

But both Sands and Greenwood saida number of critical issueswill be the focus of the Canada-U.S. relationship going forward regardless of which party has control of Congress.

Inflation and the economy

Like Canada, the U.S. has been grappling with record-high inflation over the past year. Polls have cited the cost of livingas a top priority for American voters.

Central banks in both countries have hiked interest rates in recent months in an attempt to get inflation under control. But those hikes also have been slowing economic activity, leadingmany economists to predicta recession sometime in 2023.

Due to the ties between the U.S. and Canadian economies, collaboration on economic issues will be crucialin the coming years, Greenwood said.

"How do we make sure that inflation doesn't go bananas? How do we make sure that people are employed? And that is not an easy task," she said. "There are ways for Canada [and] the United States to collaborate on the economy that could help soften the blow."

The U.S. recently passed the Inflation Reduction Act, which includes hundreds of millions of dollars to jump-start a new domestic industry manufacturing components for electric-vehicle batteries.

But the industry will require access to some critical minerals, which could attract investment in Canada's mining sector.

Ottawa committed $3.8 billion in last spring's budget to develop a critical mineral strategy. Greenwood saidprogress on thatstrategy has been slow.

"If Canada can move more quickly on its critical mineral strategy, that would be one example of how it could collaborate with the United States, take part in the bonanza of spending that is coming," Greenwood said.

Sands also suggested that the U.S and Canada could collaborate to provide easier access to business permits to boost economic activity on both sides of the border.

"I think there's a lot of potential for bipartisan support in that area and that would be a net positive for Canada for sure," he said.

Environment

Another big piece of the Inflation Reduction Act is the $369 billion the U.S. is investing inclimate change programs over the next decade including clean-energy incentives that Ottawa sees as a threat to future investment in Canada.

The Canadian government responded with a plan to match some of those incentives in last week's fall economic statement.

Sands said that if Republicansgain more influence in Congress, they'll likely push for changes to the act.

"I don't think everything in that bill is going to get thrown out. I think it's going to have to be re-branded so Republicans can take some credit," he said.

Following the act's passing, Prime Minister Justin Trudeau downplayed warningsthat Canada is falling behind the U.S. on climate action in part by pointing to Canada's carbon tax.

But Sands said that even though a national carbon tax is a "sleeper issue" in the U.S., he wouldn't be surprised if it became part of the conversation.

"If the U.S. is even thinking of moving in that direction, that would be a hot button issue for Canada," he said.

Pipelines

Another hot button issue between Washington and Ottawa in recent years has been cross-border pipelines.

Biden essentially killed the Keystone XL pipeline which would have carried 830,000 barrels of crude a day from the oilsands in Alberta to the U.S. when he revoked a presidential permit on his first day in office.

Even if the Republicans who are largely in favour of the project take control of the House of Representatives, Greenwood said they likely won't be able to revive Keystone.

"As long as the Biden administration is in the White House ...you're not going to have a return of the Keystone XL pipeline," she said.

But Sands said a Republican-controlled House could shift the conversation toward re-evaluating how pipelines and other infrastructure projects get approved in the U.S.

He also pointed to Enbridge's Line 5 pipeline which runs through Michigan from the Wisconsin city of Superior to Sarnia, Ont. as an example of the United States'complicated permit system for such projects.

In 2020, Michigan Governor Gretchen Whitmer revoked the easement that had allowed the line to operate since 1953. Enbridge has been fighting Michigan in court and the Canadian government has entered into talks with Washington to keep the pipeline operating.

While Sands said Washington likely will want to have the final say over Line 5,the involvement of the state government makes the situation complicated.

"It's a sign that in a more fundamental way, we're not doing a good job of getting cross-border infrastructure going," he said.

"So I think there's time for a reboot of that conversation and to think about how we permit and review infrastructure. That's something that I think has bipartisan support."

Travel

One sticky issue that's likely to linger regardless of which party ends up in control of Congress has to do withcross-bordertravel specifically, the NEXUS program that eases the flow of people across the Canada-U.S. border.

Last week, a bipartisan group of U.S. Congress members sent a letter to their Canadian counterparts on the Canada-U.S. Inter-Parliamentary Group asking for their "assistance navigating an issue of mutual concern: the NEXUS backlog and continued closure of Canadian service centres."

NEXUS centres south of the border reopened in April after a pandemic-related pause.

Canada, however, hasn't done the same with its enrolment centres because of concerns about extending legal protections to U.S. Customs and Border Protection (CBP) officers operating on Canadian soil protections that those same officers already enjoy at pre-clearance sites at Canada's airports.

The federal government hasn't said when if ever these Canadian offices will be operational again, but Trudeau said late last month he's "eager to get it rolling."

Canada's Ambassador to the U.S. Kristen Hillman has said the U.S. is holding the NEXUS program "hostage" by calling for legal immunity for officers working at a Canadian-based office.

U.S. Ambassador to Canada David Cohen, meanwhile, has said "it's Canada's problem to solve" and the U.S. is dead set against restoring the program without legal rights for its officers.

The NEXUS issue is a "major irritant,"Greenwood said."Democrats and Republicans are worried about it.

"NEXUS is actually hanging by a thread. Canada should be quite worried about the future of that program if it doesn't come up with a path forward."