Prime Minster Stephen Harper speaks during a question and answer panel at the Canadian Amercian Business Council conference in Ottawa Nov 19, 2012.
Credits: ANDRE FORGET/QMI AGENCY
OTTAWA - Prime Minister Stephen Harper warned Monday it would be "foolish" to disregard the potential impact of the US going over the fiscal cliff.
Speaking to the Canadian American Business Council (CABC), a policy forum on the business relationship between the two countries, he warned of the potential of a "significant negative shock" in the US - and globally - if Congress didn't come to an agreement on January's looming automatic tax increases and spending cuts.
Some mainstream economists have predicted the economy will bounce back quickly from any recession triggered by the fiscal cliff - but Harper brushed off those forecasts.
"If you go over a cliff, you can't be sure what will happen next," he said.
Harper added that now the election south of the border is over, "reasonable people in Washington" were likely to reach a solution before having their hands forced by a fiscal crisis.
In a nearly hour-long question-and-answer session, the prime minister also maintained the relationship between him and newly re-elected President Barack Obama was warm despite rumours of a rift, and described his government as "extremely pro-American."
Still, the prime minister painted a portrait of a relationship that nonetheless held challenges and surprises.
The Conservative government has made expanding trade outside the traditional US-Canada partnership a priority in recent years, turning its attention especially to Asian Pacific and European Union nations. This was in part sparked by Washington's foot-dragging on making a decision on the Alberta-to-Texas Keystone XL pipeline.
That project needs the stamp of approval from the president, delayed until after the election and now expected in early 2013.
Harper said Canadians have embraced the idea of free trade but that there's a different attitude south of the border.
"I see a surprising amount of protectionism in American political discourse on both sides of the political divide," he said. "While individual trade decisions or issues can be controversial, the concept of being part of trade in a global economy is not seriously challenged here."
Harper also touched on another project where Canadian interests are dependent on a presidential green-light - the new Windsor-Detroit bridge. The border crossing there is currently the busiest between the two countries and a new bridge would ease any bottlenecks, but the project has been fiercely opposed by the owner of the current Ambassador bridge.
Still, Harper sounded a positive note.
"On the US (political) side, everybody wants it," he said. "We're not pushing uphill here."