Relations between Washington and the government here, seldom perfect, are in disrepair. On a variety of energy, environmental, economic and trade issues, an ideological war of words between the two governments has made the 450 air miles that separate the two cities seem like a continent.
President Reagan, since taking office last year, has met with Prime Minister Pierre Trudeau more often than with any other head of state. But what has emerged from those meetings and other exchanges between the governments is, in the view of Canadian officials, an unprecedented degree of acrimony, much of it private, but some of it spilling into public hostility. "By any measure, relations have never been worse," said one Canadian official.
In that environment Mark MacGuigan, Canada's Secretary of State for External Affairs, will meet with his counterpart George Shultz in Washington Tuesday in what a Canadian spokesman called a "get acquainted" meeting. MacGuigan, who asked for the session, will discuss the "rather bleak" state of Canadian-U.S. relations, focusing on a laundry list of outstanding problems, the official said.
From the Canadian side, the most recent example of the ideological gap between the two governments is the administration's ban on its allies' use of U.S. technology to build the Soviet gas pipeline, which confirms the fear here that Washington is willing to use economic and trade threats to impose its view of the world on other nations.
The direct economic impact of the pipeline decision for Canada is negligible, but no other country is more vulnerable to such actions, officials here say. Canada is the United States' leading trading partner, and the two nations had about $10 billion in two-way trade in 1980.
"I think that suddenly the Europeans have realized how serious a situation is when a country as powerful as the United States can impose the application of its laws, especially in the economic field, on other countries," Trudeau said at a press conference July 9.
"Now perhaps they will understand a bit better that a country which is economically dominated, as Canada is, has a right to attenuate the effects of that economic domination," the prime minister said.
On issue after issue the Canadian government and others here who share the commitment to the "Canadianization" program--the effort to increase rapidly Canada's control over its resources--think the Reagan administration barely recognizes this nation's sovereignty. "They treated our oil program as if it were California pulling away from the States," said an Ottawa official.
"Canadians are being given a feeling that the Reagan administration doesn't respect Canada's right to pursue its own interests," said George Radwanski, editor in chief of The Toronto Star. "The Reagan administration has already done more to imperil the traditional good feeling between Canada and the United States than certainly any other recent American government."
In addition to the set of "Canadianization" issues, Ottawa has repeatedly expressed frustration with the administration's failure to address environmental consequences of acid rain and a series of other air and water pollution problems.
Acid rain--caused when air pollutants, apparently from coal-burning plants, combine with water in the atmosphere and fall as rain carrying nitric and sulfuric acid--has polluted a quarter of Canada's lakes, government officials say. Not only has the U.S. administration done little about the issue, but budgets for Great Lakes environmental studies have been cut.
Ottawa's unhappiness with high U.S. interest rates, which Canada's delegation to the Versailles summit made its only issue, has added to the clamor.
"We complained as loud as we could," said Finance Minister Allan MacEachen. Asked whether the pitch was successful, MacEachen gave a statesman's answer: only if U.S. interest rates had come down "the day after the summit" could the parlay have been instantly labeled "a resounding success," MacEachen said. "I think the president was listening."
From the Washington side, the tension stems, in essence, from the Trudeau government's support for economic interventionism and its accompanying commitment to nationalistic policies toward new and old foreign investors through the National Energy Program (NEP) and the Foreign Investment Advisory Agency (FIRA).
Earlier this year, U.S. Trade Representative William Brock called Canada a "developing country," and U.S. Ambassador to Canada Paul Robinson has repeatedly criticized the Trudeau government's spending policies.
The U.S. oil industry has found a sympathetic ear in Washington to the charge that the NEP, through heavy taxes on foreign companies and in particular a plan that calls for the Canadian government to be given a 25 percent interest in newly discovered petroleum reserves on federal lands, takes away the incentives to expand plans for exploration in Canada.
Through "buy backs" of foreign interests, the program has a goal of reducing foreign ownership of Canada's energy resources from about two-thirds to 50 percent, cutting both dependence on foreign oil and overall consumption.
The FIRA program, now almost eight years old, is designed more broadly to encourage foreign investors and particularly U.S. companies to spend more money in Canada than just the cost of a factory or other investment. Under FIRA, U.S. companies seeking to invest in Canada are urged to hire Canadian firms to print their annual reports, handle their advertising programs or perform other services. Officials here defensively explain that the program is basically a negotiating tool, and permission to build plants or other investment proposals is granted routinely, particularly for small businesses.
"Canada and Canadians have always welcomed foreign partnership and foreign investment," Ambassador to the United States Allan Gotlieb said in a speech several months ago. "We shall continue to do so. We need them both."
But with U.S. concerns owning a third of the 100 largest companies in Canada, outside ownership is a real and visible economic and political issue. "Mutual dependency can mean mutual vulnerability," Gotlieb also said recently.
Adding to the tension is the concern expressed by Canadian officials in Washington and Ottawa that Congress too is in a feisty mood about a variety of issues that affect Canadian interests.
Last month, for example, the Canadian government took the unprecedented step of asking President Reagan to veto legislation passed 85 to 10 by the Senate that would implement a two-year moratorium on licenses for Canadian trucking firms. The House has yet to act on the measure. Trucking firms in the United States allege that they are discriminated against by Canadian officials, who deny the charge.
"Some Canadian interests have become pawns in the election campaigns of several members of Congress," Gotlieb has complained.
Clearly, the Reagan administration's emphasis on cutting the federal role in domestic affairs, its reliance on free market economics and dependence on private sector initiative run counter to the outlook of many Canadians. Canadians get virtually free health care from their government, which also operates, either on the federal or provincial levels, most airlines, railroads and public utilities.
Though Canadians expect a lot from government, the Canadian public at large, and business officials in particular, speak well of the American private sector. And, despite the yelling at Versailles, it is difficult for officials here to blame their economic woes solely on the Reagan administration. The two economies, and thus the two peoples, are irrevocably tied together, and therefore trade and defense commitments stabilize the Canadian-U.S. links even during tense periods.
"There will always be irritants," MacEachen said. "The job is to manage them as well as possible."