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Buddy Biden and budget: Enough to boost Trudeau?
Whatever else Joe Biden accomplished in his recent visit to Ottawa, he helped his friend Justin Trudeau change the channel away from a damaging scandal about Liberal inaction in the face of Chinese election interference.
The scandal, which the Liberals had handled with customary awkwardness, was running out of steam anyway. But Biden’s arrival and the 2023 budget that followed gave Trudeau the opportunity to shift attention from whatever it was they didn’t do in the past about Chinese meddling to what they will do in the future with their friend Joe.
The big announcement? A deal to amend the Safe Third Country Agreement, which allowed Canada to close the irregular border crossing at Roxham Road. This removes a huge political irritant for Trudeau, who must keep Quebecers onside if he is to win another election.
But on the big economic question — how Canada will respond to Biden’s massive Inflation Reduction Act — the Liberal plan may not keep businesses from heading south to take advantage of enormous incentives Washington is handing out to anyone with a clean energy project.
Canadian Finance Minister Chrystia Freeland, who wrote her budget with New Democratic Party Leader Jagmeet Singh looking over her shoulder, described the economic plan as fiscally prudent, but nobody calling for prudence thinks that’s what she delivered. The budget projects increased spending and a final departure from the government’s own fiscal guardrails.
Bay Street (Canada’s financial sector) seems unimpressed, but Freeland appears to have had little choice but to go deeper into the red, given the need to keep Singh onside and respond to the IRA.
The Canadian government is rightly nervous about this $350-billion package, which offers huge open-ended tax credits for clean energy projects, raising the fear of capital flight south. In Ottawa, Biden talked about the benefits to Canada of closer integration of the two economies, pointing to jobs in Canada packing semiconductors that are produced in the United States. But there are other sectors he didn’t mention, such as biofuels, that are exposed to American inducements.
In the budget, Freeland announced 16.4 billion Canadian dollars ($12.1 billion) in tax credits for clean tech and billions more for the Canada Growth Fund and the Canada Infrastructure Bank, all with the goal of jumpstarting clean tech projects in Canada. But even when planning to spend so much that Bay Street economists are grumbling, it’s not clear it will be enough to prevent capital flight.
The government will argue that the investment tax credits are big enough to stop companies from leaving, but that may not be true, says Rachel Samson, vice president of research at the Institute of Research for Public Policy.
“I’m not sure that that’s quite the case. I think a lot of investors would like that production tax credit, which pays per unit of product produced. That provides a lot of certainty on the return from investment. But from a government point of view, that’s fiscally risky.”
The industrial measures in the budget are “too late in the game,” says Robert Asselin, senior vice president for policy at the Business Council of Canada and a former budget director for former finance minister Bill Morneau.
The government ought to have laid the groundwork for this moment in last year’s budget, he says. “Here we are two years later trying to come up with tax credits that are generally good, but as a fulsome response from the government, hard to measure as a whole.”
The upside for the government is that the opposition Conservatives don’t know whether to support or oppose the industrial measures, although they are sure the government is spending too much money.
It may all be clearer when the government eventually gets around to putting flesh on the bare bones in the budget.
Gerald Butts, vice chairman of Eurasia Group and former principal secretary to Trudeau, says two questions remain: “How are you going to ensure all of this new policy achieves its objective, which is to prevent money leaving Canada to the United States? And, more importantly, how do you ensure it is funding decarbonization?”
Biden, Trudeau, and Freeland have changed the channel. It doesn’t mean Canadians will approve of the new program.
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Asylum-seekers board a bus after crossing into Canada from the US in Champlain, New York.
What We’re Watching: Border clampdown, Haiti’s hellish choices
Crackdown at Roxham Road
While the great and the good were celebrating the progressive partnership between Joe Biden and Justin Trudeau at a glamorous Ottawa state dinner with yellowfin tuna and Alberta beef, Mounties were shutting down the irregular border crossing at Roxham Road, south of Montreal.
This delighted Quebec Premier François Legault but came as a shock to the desperate migrants who were en route to the crossing when the news broke. The sad and difficult stories of desperate migrants — fleeing war, crime, poverty, and repression — were not shared at the dinner where Canadians feted Biden. The quid pro quo for Biden’s help was a Canadian agreement to accept 15,000 migrants from the Caribbean and Central America.
Yet, closing the irregular border crossing at Roxham Road will likely have a negligible impact. Even if the move initially slows the influx, smugglers will find other routes — which could be more perilous. In fact, eight migrants died late last week in an attempt to cross the St. Lawrence River from Canada to the US.
One striking thing about the announcement was that nobody got wind of it until the day before. The governments had reached a deal in the spring of 2022 but succeeded in keeping it quiet until the last minute, apparently out of a desire to make sure migrants didn’t make a rush for the border.
Terrible choices for Haiti
In the leadup to Biden’s visit, the US repeatedlysignaled that it would like Canada to play a leadership role in a military intervention to bring order to chaotic, hellish Haiti, both for humanitarian reasons and to slow the flow of migrants to both Canada and the US. Nobody thought Canada would send in peacekeepers.
Indeed, Trudeau did not agree to send troops, and Biden said he wasn’t disappointed, but both leaders promised to keep working on the problem.
Perhaps Brazil could return to stop the gangs from terrorizing the population, former president of the World Peace Foundation Robert Rotberg argues, after which Canadians, and especially Canadians from the Haitian diaspora, could play a central role in reconstructing a government.__________
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Migrants wait to cross into Canada at Roxham Road, an unofficial crossing point from New York state to Quebec for asylum-seekers.
Will US-Canada border deal mean riskier future for migrants?
It had been nearly seven years since a US presidential visit to Canada when Joe Biden arrived in Ottawa last Thursday. President Donald Trump came by in 2018 for the G-7 summit, but it’s not the same as a dedicated stop.
As these things usually go, Biden’s visit was cast as part politics, part policy.
Would it help Prime Minister Justin Trudeau, lower in the polls than he’d prefer and surely thinking about an election that is due by Oct. 2025 but could arrive sooner? Would it help Biden, who comes from a country where presidential elections run 24/7/365? Would anything meaningful come from all the banners and speeches and flags and handshakes?
On the eve of Biden’s arrival, news started to leak about a border deal — an agreement that was announced on Friday. The amendment to the Safe Third Country Agreement will see Canada officially accept 15,000 asylum-seekers from the Western hemisphere under a new refugee program while gaining the right to send back migrants who attempt to enter the country through unofficial crossings within 14 days of intercepting them.
More details are to come, including who the 15,000 will be, where they will be drawn from and how they will enter Canada. There is also more to come on precisely how the 14-day interception period will work, although those who cross irregularly and are not apprehended within that window may apply for asylum and have their case heard by the Immigration and Refugee Board of Canada.
New deal, a long time coming, closes loophole
For years, the two sides have wrangled over irregular crossings, which were not covered in the STCA back in 2002-2004 for reasons that aren’t exactly clear. This “loophole” made asylum-seekers the responsibility of whichever country they crossed into through unofficial points of entry, a challenge that the U.S. didn’t mind shifting onto their northern neighbor as many claimants crossed into Canada across its border.
In 2022, Canada saw nearly 40,000 people arrive at these unofficial border spots, asylum-seekers who, had they crossed at official points of entry, would have been turned around and sent back to the United States under the terms of the agreement.
But as the issue became more of a problem for the United States – over 100,000 migrant encounters from Canada were reported by US Homeland Security officials last year – the Biden administration warmed up to the idea of amending the agreement.
Migrants now face even more risks
The new Trudeau-Biden agreement took effect immediately. No notice. No grace period. As Verity Stevenson reported for CBC, migrants were stunned and heartbroken.
Migration advocates and experts warn the amendment will drive asylum-seekers underground, which may lead to increased deaths. Moreover, it may not solve the crisis at the border, which is a significant but small part of a much deeper and growing catastrophe worldwide: The UN High Commissioner for Refugees estimates that more than 117 million people will be displaced in 2023. What does that conclusion say about the deal?
Christina Clark-Kazak, an associate professor at the University of Ottawa and migration expert, says the approach is unproven. Indeed, she says the deal is “part of a trend of rich countries ensuring that asylum-seekers never get to their borders, so they never have to deal with them.” Instead, governments prefer to pick and choose their claimants from a distance.
Whether the deal is good policy will be determined by outcomes, but the forecast is a bit grim: People are still going to come, and their journey will become riskier.
A mix of public policy and politics
The whole thing is political — and politics. The Roxham Road crossing between New York state and Quebec has seen the lion’s share of irregular crossings. Quebec Premier François Legault said he was “happy” with the deal and called it a “very good victory,” citing his province’s inability to process and settle claimants who entered at Roxham.
The STCA amendment is a political win for Trudeau, at least for now. It’s particularly important for what it may do for his party’s fortunes in Quebec, where the future of the Liberal government will be determined.
Christopher Sands, director of the Canada Institute at the Wilson Center, says there’s a sound political logic to the deal. Canada will be alleviating some of the pressure on the U.S. border with its acceptance of 15,000 asylum-seekers while closing unofficial crossings, which may play well for the Liberals and the Democrats with their voters. As noted, there will also be fewer migrants coming into the United States through Canada after years of increased north-south crossings.
“We both get things that will help our current leaders with elections,” Sands says. This is a critical point to understand the machinations of the deal, which could serve as a model for the US-Mexico border, too — a much bigger challenge for Biden and U.S. policymakers. Given that, this deal could be “a reasonable plan that buys Biden time and takes the pressure off,” he adds.
Moreover, Biden may be thinking that Trudeau is his best bet for a workable deal, Sands notes, as there’s no guarantee the Liberal prime minister will still be the country’s head of government in a few years. For the Canadian side, Trudeau might be thinking the same thing, staring down a possible DeSantis or Trump redux administration.
Do as we say, not as we do?
Whatever the case, Clark-Kazak warns that the change to the STCA may further undermine Canadian, and by implication US, standing abroad. “We can’t go to a country like Pakistan and say, ‘You must continue to accept hundreds of thousands, if not millions, of Afghans because you have a moral obligation to do so’ and in the meantime, we’re closing our borders,” she says.
The border deal is the marquee story of Biden’s visit to Canada. The STCA amendment may be good politics. But it may backfire. Whether it’s good policy will be determined in the months and years to come. And the devil will be in the details. In the meantime, there are plenty of reasons for concern despite two days of toasts and pats on the back.
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U.S. President Joe Biden and Canadian PM Justin Trudeau during a bilateral meeting at the North American Leaders' Summit in Mexico City, Mexico, January 10, 2023.
Biden-Trudeau talks focus on immigration and defense
Amid the pomp and pageantry accompanying President Joe Biden’s first official visit to Canada, he and Canadian PM Justin Trudeau are looking to make some deals.
Even before Biden’s arrival late Thursday, news broke that the two countries had reached an agreement on irregular migration flows across the US-Canada border, a sticking point for both governments. An influx of asylum-seekers across the Roxham Road crossing into Quebec has dogged relations, with nearly 40,000 migrants crossing in 2022 alone.
Trudeau has been asking the US to renegotiate the Safe Third Country Agreement, which requires asylum-seekers who cross select border points to be sent back to the country where they first entered. Why? Because it encourages migrants to enter at irregular crossings like Roxham Road, and once they’re in Canada they can legally make asylum claims.
The precise details of the new migration deal are still under wraps, but Canada has reportedly agreed to take in 15,000 migrants from the Western Hemisphere through official channels. The agreement also would reportedly allow both countries to turn away asylum-seekers who cross the border without authorization.
The Biden-Trudeau talks on Friday are also expected to turn to defense. Last month’s Chinese spy balloon fiasco has led to increased pressure on both leaders to ramp up security. North Korean missile tests and Russian advances in missile technology have added more urgency to North American defense.
A new Maru Public/GZERO poll finds that the vast majority of Americans and Canadians (93% and 91%, respectively) want the two countries to boost security efforts, and most Canadians favor either a joint missile-defense system or having US missiles on Canadian soil.
With both Canada and the US being behind on the modernization of the North American Aerospace Defense Command – much of its radar systems are from the 1980s – Friday’s discussions are likely to touch on NORAD investment.
Biden is expected to push Trudeau on military spending – like many NATO members, Canada lags behind its defense spending target of 2% GDP. Canadian NORAD officials complain that current military capabilities are sluggish. Last year, Trudeau’s government pledged $4.9 billion to upgrade NORAD, but Americans are skeptical about the speed at which Canada can deliver.
The war in Ukraine is also putting Arctic defense back on the map. The Maru/GZERO poll showed that majorities in both the US and Canada support a joint military presence in the Arctic. Receding ice in the region has freed up shipping lanes, portending new access to lucrative resources like oil and rare-earth minerals. The region’s security would take on even more geopolitical importance should Finland and Sweden join NATO, possibly making it a new frontline pitting Russia against the West.
There's no shortage of thorny issues for Biden and Trudeau to tackle, from defense and immigration to trade and Ukraine. For more on the presidential visit, be sure to join us on Twitter Friday at 12pm ET. We’ll be talking with Forbes' Diane Brady, Eurasia Group's Gerald Butts, and GZERO's Evan Solomon, breaking down what Biden and Trudeau need to accomplish during their meeting. Set a reminder here.
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