December 7, 2011 / 8:48 PM / 6 years ago

Keystone overshadows U.S.-Canada border deal

WASHINGTON (Reuters) - President Barack Obama said on Wednesday he wanted answers to the environmental questions about the Keystone XL pipeline, whose delay overshadowed a new U.S.-Canadian border agreement announced on Wednesday.

Standing next to Canadian Prime Minister Stephen Harper at the White House, Obama rejected an effort by Republicans in Congress to tie support for the $7 billion project to a payroll tax extension and insisted a final decision would follow a “rigorous” review process apart from politics.

“Any effort to try to tie Keystone to the payroll tax cut, I will reject,” Obama said, responding to the move by Republican House Speaker John Boehner to link the pipeline to the middle class tax cut Obama has been campaigning for.

“It shouldn’t be held hostage for any other issues that they may be concerned about. And so my warning is not just specific to Keystone. Efforts to tie a whole bunch of other issues to what’s something that they should be doing anyway will be rejected by me,” he said.

Harper said the U.S. president had an “open mind” about the fate of the proposed TransCanada pipeline to transport Albertan oil to the Gulf of Mexico, which the White House put on hold until 2013, after next November’s U.S. election.

“He’s indicated to me, as he’s indicated to you today, that he is following a proper (process) to eventually take that decision here in the United States, and that he has an open mind in regards to what the final decision may or may not be,” Harper said.

The two leaders, who addressed themselves by their first names and described themselves as friends, both referred to “candor” in their closed-door conversation at the White House where Keystone was a major issue. They addressed the press after that meeting to unveil plans to modernize the U.S.-Canada border and synchronize their regulations to help exporters.

COOPERATION

Harper said the trade and regulatory agreements would help create “a new modern border” between the countries, which are already linked by a free trade deal that also includes Mexico.

“Together, they represent the most significant steps forward in Canada-U.S. cooperation since the North American Free Trade Agreement,” he said.

The timeline for implementing the two accords - one about border management and infrastructure and one about regulations - were not immediately clear, though they contained benchmarks for progress in the next six months.

Both deals would have to be approved by Congress and Parliament, which may be especially difficult for Obama who has been struggling to pass components of his $447 billion jobs bill including the payroll tax cut he is now focused on.

But Washington and Ottawa agreed in principle to make it easier for cargo shippers to send goods to both American and Canadian ports, including by coordinating regulations on hazardous chemicals and auto safety, among other issues.

Canada is also set to introduce new screening measures for people traveling to Canada, similar of those in place in the United States, and both countries agreed to upgrade some border infrastructure and tighten cyber security.

The United States and Canada are each other’s largest trading partners, and the auto sector in particular often sees cars and car parts shipped back and forth across the border.

But concerns have been rising from Canada in recent years about burdensome security checks by U.S. authorities that have slowed commerce and discouraged some people from traveling.

Perrin Beatty, head of the Canadian Chamber of Commerce, said the deal should help address problems with the border that has become “stickier, most costly, more impenetrable” over the last decade because of U.S. security concerns.

Canada estimates that inefficiencies at the border impose a direct cost on the Canadian economy of 1 percent of GDP.

Additional reporting by Jeff Mason and Doug Palmer in Washington and Randall Palmer in Ottawa; Editing by Eric Walsh

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