Carpooling with Canadians

Saving U.S. automakers will require us to pay more attention to our Northern neighbors.

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It's easy to forget about Canada these days. Despite the fact that many Americans can actually see it from their windows, most of us get little news about our neighbor. With so much chaos in the world—a global financial meltdown, wars in Iraq and Afghanistan, terror attacks in Mumbai, riots in Greece—the lack of focus on Canada is understandable.

However, there are reasons for us to start paying attention. Not only is Canada going through its own share of political turmoil, but its economic woes are also intricately linked to our own, through the deeply troubled auto industry. Canadian actions over the coming weeks and months could hold significant ramifications for the U.S. economy. In turn, American actions could potentially affect political developments in Canada.

While Americans were fixated on the U.S. presidential race, Canada was having an election of its own. Canada's prime minister, Stephen Harper, won re-election in October with 38 percent of the vote, winning enough seats in the House of Commons to form a minority government for his Conservative Party—Canada's third minority government in four years. The Liberals, considered the official opposition in Canada, won 26 percent of the vote. It was their worst election showing since the 1800s, and it led to the ouster of the party leader, Stéphane Dion.

Despite the Conservatives' win, the party is reeling. An anti-Harper coalition of Liberals, the left-leaning New Democratic Party, and the separatist Bloc Québécois Party recently threatened a vote of no confidence, which could bring down the Harper government. While Harper's proposal to do away with public financing for Canadian political parties was a trigger for the revolt, the underlying concern was his initial opposition to an economic stimulus plan.

To stave off the vote, Harper appealed to Canada's governor general, Michaëlle Jean (Canada's ceremonial head of state), to suspend Parliament until Jan. 26. She granted Harper's request. The governing party's survival now depends on whether the anti-Harper faction can maintain unity over the next several weeks.

So why should Americans care about political-infighting in a foreign country? Because the United States and Canada must work together in the coming weeks to get a grip on the crippled auto industry.

The Canadian and U.S. auto worlds are tightly linked: General Motors, Ford and Chrysler also have a total of seven plants in Ontario and employ 32,000 in Canada. While the Big Three car companies have requested $20 billion from the U.S. Congress, they have also requested 6.8 billion Canadian dollars ($5.4 billion) from the Canadian government.

Last Thursday, Congress and the White House failed to come to agreement on a $14 billion auto bailout bill for the industry, potentially killing the measure for the year. Subsequently, Bush indicated that he would begin exploring the possibility of drawing on the Treasury Department's Troubled Asset Relief Program, which, so far, has been used exclusively to aid the financial industry.

On the other side of the border, Canada recently announced that it would provide approximately $3.4 billion (Canadian) to the Canadian units of the Big Three. However, that aid is contingent upon a U.S. deal for the industry coming together.

Any auto deal is intertwined with Canada's political situation. A bailout has become a leveraging point for the opposition coalition: the new Liberal leader, Michael Ignatieff, has indicated that the auto-sector bailout and other economic stimulus measures are pre-conditions for allowing the government to survive. Harper admitted that the bailout plan for the auto companies is so urgent that it could not wait until Parliament reconvenes on Jan. 26.

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