Important recent events, such as the terrorist attacks of September 11, the election of a second Bush administration, and the advent of a minority Liberal government and uniting of the political right in Canada, have had and will have important effects on both the conduct of bilateral relations and on domestic social policy in each country--not only directly but also as a result of the reciprocal dynamics operating between social policy and bilateral relations. While social policy is undoubtedly peripheral to the direct conduct of bilateral relations between the United States and Canada, it contributes to shaping the political context in which those relations are conducted and helps define the limits of the permissiveness of the public consensus (1) in regard to efforts to deepen the bilateral relationship. (2)
In considering the likely impacts of developments in social policy on bilateral Canada-U.S. relations and vice versa, it is necessary to sketch out the nature of the relationship between the two. The first section of the paper does so and argues that the relationship between social policy and bilateral relations is indirect, reciprocal (with social policy having important implications for bilateral relations and vice versa), asymmetrical (with a much closer relationship between social policy and bilateral relations existing in Canada than in the U.S.) and, in the Canadian case, paradoxical. The second section considers how this relationship is likely to respond to the current political context and developments. Whether deeper integration is viewed favorably or not, the political prospects, resulting from the approach both to social policy and to the conduct of bilateral relations in each of the two countries, may be more conducive to the pursuit of deeper integration than many observers recognize.
The Relationship between Social Policy and Bilateral Relations
The relationship between social policy and bilateral Canada-U.S. relations is indirect, asymmetrical, reciprocal, and paradoxical. Sketching out this relationship is an important element in speculating about how the relationship will respond given current political conditions.
As a result of the limited mobility of people across the Canada-U.S. border, cross-jurisdictional spillovers resulting from social policy decisions in each country are relatively limited in comparison with other policy areas such as environmental policy. As a result, social policies in Canada and the U.S. rarely become direct bilateral issues themselves.
There are, of course, a limited number of exceptions such as the issue of the sale of prescription drugs from Canada in the United States. The political attention drawn to this issue in the 2004 presidential election may well focus American attention more closely on Canadian practices in controlling excessive drug prices and generate demands for changes in Canadian policy regarding pharmaceuticals. Another area of social policy which has the potential to generate important bilateral issues is the private provision of social services in Canada and the protection that American providers of such services may be afforded under NAFTA's chapter eleven in the event that governments in Canada attempt to move privatized services into or back into the public sector. To date, such developments remain hypothetical. Rather, the most significant effects of social policy on bilateral relations and vice versa are more indirect.
The conduct of bilateral relations on a day-to-day, issue-by-issue basis is likely to have virtually no impact on social policy. The bilateral issue with the most serious implications for Canadian social policy is the potential for cross-border labor market integration. Support for deeper integration including integration of labor markets has been emerging from various notable quarters including David Dodge, Governor of the Bank of Canada; Allan Gotlieb, former Canadian ambassador to the U. …