Alberta's 'Green' Talk: A Serious Plan to Combat Greenhouse Gases, or Gambit to Secure U.S. Keystone XL Approval?

By Keith Edmund White

Editor-in-Chief

Alberta, Canada's oil production heavyweight, is pushing for increased carbon production taxes and seeking to slash GHG emissions.  Apparently, Ottawa is surprised.  Yeah, I thought I was reading an exceedingly dry Onion article.  Oh, wait...it's a plan offered by Alberta's Environment Minister...that is not endorsed by Alberta's Conservative government.  OK, the sky's not falling.  So the real question:  Are Alberta's Conservatives looking green to win Keystone, and then offer up a dead-on-arrival plan?

Is McQueen's  carbon plan for real?

The Globe and Mail reports (or hypes up?) a recent carbon tax and reduction plan offered by Alberta's Environment Minster:

The Alberta government has quietly presented a proposal to sharply increase levies on carbon production and force large oil-industry producers to slash greenhouse gas emissions by as much as 40 per cent on each barrel of production, a long-term plan that has surprised Ottawa and industry executives with its ambition.

Alberta Environment Minister Diana McQueen stunned a recent meeting in Calgary attended by senior oil executives and her federal counterpart, Peter Kent, with the proposal, which goes well beyond anything Ottawa or the companies contemplated, industry and government sources said Wednesday. The three sides are engaged in intense negotiations, with the industry warning that regulations that are too onerous could undermine the competitiveness of the oil sands sector as it seeks international investment. to drive production growth.

...

[Alberta Premier Alison Redford/Diana McQueen's boss] and Prime Minister Stephen Harper are under considerable pressure to introduce regulations for the oil industry to limit greenhouse gas emissions.

The Cynical Read:  Looking Green Key to U.S. Keystone Approval.  My guess is that this plan has one main audience:  the United States.  If Alberta looks 'super' green, it makes it easier for Keystone to get approved.  The catch:  the plan will be so long-term that the 'carbon pain' won't be felt until Alberta's Progressive Conservatives or either out of office or filled with new leaders.

Cynical Read 2.0:  What 'Great' Timing!  Oh, and this is a pretty well-timed leak, given that Alberta oilsands environmental data is about to be released. 

Yeah, yeah...but maybe the plan's for realies?  Ha.  This March 2013 Globe and Mail article shows just how blistering the Alberta's environmental hot potato is.  

The main takeaway:  Alberta Premier Redford will take heat for any real carbon tax increase, let alone steep reductions, unless (1) they come online way into the future and (2) secure Keystone XL in the short-term.  

And Redford's opponents, Alberta's Liberal Party and the strong provincial party Wildrose, are happy to exploit Redford's tough spot whatever way they can. 

Something tells me that Redford's Alberta critics and Keystone critics are going to react to news of Redford's Green Plan 2.0 with some help The Who:

But it might just get Alberta Keystone.

From the Globe & Mail ,March 2013 article on Alberta Conservative's environment-Keystone XL headache:

The Alberta government’s climate-change plan was under scrutiny Tuesday, a day after comments Ms. Redford made in Ottawa were interpreted as a call on the federal government to follow Alberta’s lead in putting a price on carbon.

...

The Premier quickly backed away from those remarks, saying that’s not what she meant, but was grilled in Question Period by the opposition. At one point, she scolded the provincial Liberals – a party that last year proposed what would ultimately be a $1.8-billion-per-year provincial carbon levy – for “saying that our environmental record in Alberta isn’t good enough. That’s not good for Alberta, and it’s not good for Canada.”

Liberal Leader Raj Sherman said a higher carbon price would help pave the way for pipelines. “If we actually dealt with the environmental issues that we face, we could get our pipelines to the U.S. and the West Coast. It’s hurting us not to do this right,” he said.

...

The Premier was said to have called on the federal government to follow Alberta’s lead and introduce a price on carbon. Her office later said she was misunderstood, issuing a clarification and then making Ms. Redford available to speak to reporters in Edmonton on Tuesday. “I am in no way advocating any sort of national carbon tax. That’s for other governments to decide,” she said.

Wildrose Leader Danielle Smith nonetheless accused the Premier of advancing a plan that “would see Alberta’s vast resource wealth sucked out of this province and pumped into Ontario and Quebec.” Ms. Redford later fired back. “The suggestion that that’s what the conversation was about [in Ottawa Monday] is absolutely absurd, but I don’t expect anything more from the opposition,” the Premier said, later noting that Ms. Smith said just last year that the “science isn’t settled” on climate change.

Evening News Wrap

By Keith Edmund White, Editor-in-Chief

So, yes, this is a gross simplification of a BIG BIG week in news.  But we got news at the belly-aches in both nations' legal professions, tax-carping, election-updates, trade, top Canadian fiction, and more!

Canada-U.S. News

Life, death, and taxes…and Extraterritorial Application of U.S. Law in Canada.  Canada and the United States are in tax treaty talks, and it seems like Canadian banks are going to have to deal with the administrative burden of checking if their clients are dual citizens.  The lurking issue: dual citizens in Canada avoiding U.S. taxes.

Canada’s Late Entry to the TPP…Not a Huge Worry, But There’s Still Reason to Worry.  While slamming subsidies U.S. states use to lure companies, and how they hurt Canadian merchants, Peter Clark—in this detailed review of the Trans-Pacific Partnership trade talks, it’s impact on Canada, and the global economy—says (1) Canada doesn’t have much to fear with it’s late arrival to the TPP and (2) concludes:

“It’s far too early to either dismiss TPP as a useless exercise or embrace it as a cure for what ails the global economy. While we see problems now, they can be fixed, with flexibility and compromise. If the TPP is a wine, it clearly needs some ageing before we can properly pass verdict on it quality.”

Canada News

Bye, Bye By-Elections!  Mark Abley, at The Gazette, talks on Monday’s by-elections in Canada, arguing that while Canada’s Conservative lost ground, a united Left is the only way to see a change in Ottawa.  Monday’s by-election results in brief: Conservatives held on to seats in Calgary-Centre and Durham, with a NDP-Green battle in Victoria going the NDP’s ways.

CETA Imbalance?  So What?  Paul Wells, taking note of imbalance concerns regarding Canada-EU trade talks, defends progress on the deal.  And at the National Post, Andrew Coyne gives his thoughts on the “logic of trade negotiations” in general:  “The whole situation is an absurdity.  It’s like a hostage negotiation in which both sides have guns to their own head.”

Moving Out:  Financial Post on the rough road ahead for Bank of Canada governor Mark Carney’s coming move to England; and the Globe and Mail on the importance of vetting cabinet officials and the resignation of Quebec’s environmental minister Daniel Breton. Added-Bonus:  Stephen Gordon at Macleans  on how much credit Carney should get from Canada’s robust post-financial crisis economic performance:

“What I take away from this is that we could have done much worse, but I don’t think we could have done much better. Stephen Harper and Mark Carney were dealt good hands and they played them well.”

Must-Read List.  The Globe and Mail picks the top 23 Canadian fiction books of the year.

Legal News

Going to (U.S.) Law School Worth It!  Lawrence E. Mitchell, Dean at the Case Western University School of Law, defends going to law school in the NYTimes:  

"We could do things better, and every law school with which I’m familiar is looking to address its problems. In the meantime, the one-sided analysis is inflicting significant damage, not only on law schools but also on a society that may well soon find itself bereft of its best and brightest lawyers."

Canada’s Lawyers in Crisis?  The Globe and Mail reports on the state of Ontario’s legal profession: “…it was clear that some of the country’s top legal minds believe their profession is, in effect broken.”

Border News Wednesday Round-Up

Some attention-grabbing Canada-U.S. border headlines.

Border Shooting.  Yesterday afternoon a Canada Border Services Agency officer was shot by an unidentified man at The Peace Arch crossing between Washington and British Columbia.  The shooter then took his own life, with the border agent reported in stable condition.  The border crossing, “the third busiest port of entry on the northern border[,]” has been closed since the shooting, but is slated for reopening at 4 p.m. today.  [Source:  WashingtonPost.com]

Cross-Border Crossings Would Be Twice as High if No 9/11, Report Finds.  A great two-day conference just wrapped up in Burlington, Ontario.  The TRANSLOG 2012 Conference explored border logistics, the cross-border talent pool, and border transportation issues.  One attention-grabbing tagline from the conference:  Meredith MacLeod at thespec.com reports “[i]f the 9/11 attacks hadn't happened, more than twice as many Canadians would be crossing the border to shop in the United States each year.”  Her source:  University of Windsor’s William Anderson, the first presenter at TRANSLOG 2012—an event hosted by the McMaster Institute for Transportation and Logistics (MITL) and Supply Chain and Logistics Association Canada (SCL). 

But Canadians Are Filling Up Border City Hotels.  HotelNewsNow.com reports that Canadians who shop in the U.S. are filling up U.S. hotels.  One interesting wrinkle to the story: Canadian shoppers who spend 24 hours or more get to bring back to Canada up to $200 in goods without a Canadian duty or taxed imposed.  If a Canadian shopper ups his or her U.S. visit to 48 hours or more, that duty/tax free credit goes up to $800.  (Note:  Both amounts are in Canadian dollars, naturally.)

The Coming North American Union? Beyond the Border Regulatory Gears Are Turning.  Lamenting America’s loss of sovereignty, Dana Gabriel—for Dissident Voice—does write on some interesting developments in the Dec. 2011 Beyond the Border Initiative:  (1) The Transportation Security Administration’s extension of TSA Pre, an expedited screening initiative at 27 U.S. airports; (2) the United States Department of Agriculture has launched a pilot program for a pre-clearance screening process for Canadian fresh meat; and (3) greater cooperation between Canada and the United States when it comes to ship inspections on the St. Lawrence River.   The impact: while some have criticized the slow-moving Beyond the Border Initiative, it’s clear that U.S. officials are beginning to streamline regulatory hurdles on the U.S.-Canada border.  I wonder how many of Gabriel’s updates came courtesy of Woodrow Wilson Canada Institute’s Beyond the Border Observer: which blogs today on the United States Coast Guard and Transport Canada launching a pilot program for the joint inspection of certain ships in the St. Lawrence Seaway.

CFTC's Washout: CFTC Goes After RBC Alleging Illegal Wash Transactions, But Is This Really About Market Integrity or Creating Positive Spin?

by Keith Edmund White, Editor-in-Chief

As has been reported pretty much everywhere over the last 48 hours, the Commodity Futures Trading Commission (CFTC) filed charges against the Royal Bank of Canada (RBC) yesterday, alleging RBC conducted wash trading on transactions worth millions.

In this post I'll make my best attempt to (1) break down what's meant by 'a wash trading scheme' and why they matter, and then (2) review why the CFTC has singled out over this admittedly very large, but rather unorthodox trading scheme.

In short, we'll see that while this looks like a wash trading scheme, it really seems more like a tax dodging scheme. And, even stranger, is seems that neither U.S. market participants or the market that hosted RBC's trade were negatively or positively impacted. Rather, the only loser in these transactions seems to be Canada's tax agency. So, why is the CFTC launching a full-court press? It may have more to do with making up for past mistakes than actually keeping markets free of corrupting wash transactions.

What's a "Wash Trading Scheme"? Or The Story of the Lackluster Lunch 

The classical wash trading scheme would go something like this:

-I'm Investor 'A' and I want to generate trading activity, why? Because trading activity will influence the price by luring other buyers.

-Investor A now thinks about the how. He gets Investor 'B' to agree to buy the stock at a certain price, and then sell it back to me at a certain price. The cycle continues.

-So while we're just throwing the stock around, with no net-gain or loss, trading activity goes up, which artificially brings up the stock price.

-As we start to see the little bubble we've created, one of us sells before the bubble pops.

What's another way to think about this? Imagine an unhappy kid who brings in a lackluster lunch, and wants to trade it. Problem is, no one wants it. His way around it: get his friend to chat up how great this lackluster lunch truly is. Suddenly, crowd mentality and peer pressure take hold; a bidding frenzy ensues; and, suddenly, our unhappy kid suddenly can trade his lackluster lunch for a feast.

Why Washing Isn't Just Bad Ethics, but Bad for Financial Market Integrity

Now--yes, this looks scammy--but securities regulators go after this for a more important reason: A & B's 'wash' trading scheme artificially raised the value of the stock, which then they cashed out on. As you might guess, this undermines an essential ingredient of the efficient market theory: that the market takes in and incorporates legitimate information about its assets so that buyers can be rewarded for making 'smart' choices on companies that will grow. This is good because the market rewards what it should: the more economically efficient investment. But when A & B take their wash scheme, they are rewarding themselves for tricking others, which--over the long-term--hurts market credibility and then--at the extreme--makes (1) everyone cheats or (2) everyone quits. And that's when the sky falls down.

RBC's Futures & Sole-Market-Participant Alleged Twist in Wash Trading

Now RBC was apparently more sophisticated than our unhappy kid. The goal wasn't to artificially inflate stock values, but rather to earn tax incentives from the Canadian government. Since the Canadian government offered tax credits for companies that hold dividend-paying stock for a year, RBC did just that--and held dividend-paying stock for a year on the OneChicago Exchange.

But, this is where it gets interesting [note what follows is simplified version of Matt Levine's excellent piece for Dealbreaker]: RBC it had its foreign affiliate buy futures on these stocks, basically taking out insurance that the stock values wouldn't fall. So, in short, its buying stock and ensuring that any money it lost on the investment would be outset to the gain from its affiliate. The net-effect: RBC wouldn't be making money from the investment.

What does this mean? That the price quotes for these futures insurance we're competitively priced, but rather set by the RBC to ensure no net-loss.

The Rub: If No One Else Could Buy RBC's Futures Besides RBC And It Was the Only Market Transaction of its Kind in the Marketplace, Is This a Victimless Crime? And Does That Matter?
But here's the rub: the RBC was doing all this trading on the OneChicago Exchange, where it was the only party doing this type of trade. This means, that there was no way for another user of OneChicago to get into the market for insuring RBC's stock. End-result: In a market of one, how can you manipulate prices to the detriment of others?

Now, Levine appears to suggest that this lack of effect on other market participants could cut against a CFTC's lawsuit. But I'm not so sure. Looking at the complaint's quick recitation of charges, wash trades aren't bad if they actually cause non-competitive pricing, but rather--by law--are simply bad because the CFTC says so. Hence, effect on other market participants may not legally matter. Now where intent may come in to play with possible knowledge requirements under CFTC: that of RBC (1) knowing the trades were happening and (2) that the trades were washed transactions. (But, I must admit, that from what RBC appears likely to argue, it seems the case will hinge on whether there trades were competitively prices--which, means, in essence should RBC have been willing to pay enough for its self-insurance that it did actually lose money on the transaction. But this brings up, seemingly, a gobbly gop of data being argued about--because how can you accurately value these transactions between companies and their affiliates when there are no other buyers (other then by analogy, which it seems--as described above--would be hard to show in these rather unique circumstances.). And, most importantly, this isn't the stuff that distorts markets--or causes bad information to lead investors to lose their cash. Or is it?

I would be interested in knowing is what impact RBC's trades had on the OneChicago overall marketplace. For example, if the Dow Jones Index saw a bunch of wash trading that didn't lead to artificial prices in particular stocks, increased trading volume could still impact stock rates and would impact anyone who simply invests in the index's bundle itself. Or, in terms of the RBC's transactions, did OneChicago draw other investors who saw increased transactions and jumped in? If so, Levine's effects concern may be satisfied.

Furthermore, Levin postulates that OneChicago was making money off this arrangement: could it be that RBC-like transactions risk eroding integrity in these smaller markets, which in aggregate, would definitely pack a punch on the greater U.S. financial landscape? I don't know--but I feel like whenever the briefs for these case come out, we'll finally see the bigger narrative the CFTC is pushing. Alternatively, we'll see this for what it is: hitting someone for a technical violation (of a whooping magnitude), generating positive spin, and putting a lot of resources chasing 'bad' acts that really aren't what would keep me up at night when it comes to the health of America overall financial marketplace, let alone the ever illusive world of futures trading.

But, do keep in mind, all this analysis comes from an avowedly non-expert in financial markets, and someone wholly ignorant of OneChicago's single stock futures marketplace. I'll dig more into how OneChicago works and more into how whether RBC's actions really are the stuff meriting court action (as opposed to simply telling them to stop or settling before court).

Why Did CFTC Take This Action Now?

Now there some who see a cynical motivation behind the CFTC's lawsuit: mainly, the CFTC is trying make up for the embarrassing MF Financial fiasco. The Globe and Mail's Grant Robertson casts a critical, Canadian eye on the CFTC:

After the CFTC was grilled by U.S. Senators in December over whether it did enough to police the market, and whether it was too cozy with executives at MF Financial. That has prompted observers to question whether the regulator is now looking to send a strong message that it is getting tough on alleged improprieties in the derivatives market, and whether the RBC case is a step in that direction.

“In our view, the CFTC intends its action against [Royal Bank] to be interpreted as a signal of its tougher enforcement policies, particularly in the wake of the MF Global scandal for which the CFTC has come under criticism,” NationalBank Financial analyst Peter Routledge said in a research note.

“Tougher enforcement regimes at all U.S. regulators means that regulatory complaints will be swifter and their penalties more severe. As a consequence, banking in the United States will be more risky and more costly for Canada’s banks.”

Two quick points of Robetson's piece. First, it's true: post-MF Global CFTC, with its new head, Davind Meister taking a harder line on wash transactions. But, what do you expect after dropping a ball the size of MF Global? For the CFTC to not want to get some positive spin?

Now, what's funny about this increased costs argument is this: if Canadian banks are cheating and making money off scamming U.S. markets, yes--reporting the data of their cheating will cost them money (on top of the money presumably lost 'cheating' revenue), but is anyone going to shed a tear? Now, the more nuanced way to--perhaps--make this point credible would be to say, 'This washing scheme isn't really a problem, and the resulting costs to market participates outweigh the benefits of greater regulation.' I'd like to find Routledge's entire research note to see how he might deal with that. If I grab it, it will undoubtedly be posted here.

Isn't This Really A Tax Scam?

That's what George Michaels thinks in this Advanced Trading (AT) article. But, again, this would have no bearing on the question of whether RBC vop;ated CFTC regulations. But it does make this seem like more of a show case, not one that's actually trying to stop wash trading transactions that distort prices for U.S. U.S. financial participants. From Justin Grant's AT article:

"This was not a "wash sale in the sense of the 1921 Revenue Act," said George Michaels, the founder of tax compliance software provider G2 FinTech. " From the description provided by the Wall Street Journal, the RBC technique seems to involve a hybrid of a tax straddle and a dividend farm."

A tax straddle is most commonly used in futures and options trades as a way to earn tax benefits. In order to make money using this technique, an investor who earned a capital gain takes a position that actually creates an artificial loss in the current tax year, and postpones their gain to the next.

A dividend farm, Michaels explains, is when an investor simultaneously goes long and short in two securities with similar risk profiles as a way to convert ordinary income into qualified dividend income. In this case, RBC likely found it desirable to flip its ordinary income into qualified dividend income due to the way Canadian taxes are structured, Michaels points out.

Under Canadian tax law, dividends are taxed at 19 percent, a much lower rate than the nation's 29 percent tax on ordinary income. On top of that is a provincial tax that ranges between 10 and 19 percent, Michaels adds.

But even if RBC may not be guilty of wash sales, Michaels points out that U.S. companies are barred by the nation's tax laws from executing a dividend farm scheme or a tax straddle. The Internal Revenue Service would also never allow that sort of tactic to take place.

"They're using more and more sophisticated software each year to detect and shut down anything that even remotely resembles a riskless transaction," Michaels says. "Even if the intent was to take risk, the IRS takes the position that if it 'appears' to be riskless, the tax shelter laws kick in and the deduction is denied."

What Comes Next?

Well, presumably the trial--or a big settlement. Now while I have only glanced at the statutory language, but it seems the fight will be over how regulations interpret CFTC's prohibition on wash trades. Some interesting, possible legal elements could be scienter (intent or knowledge of wrong-doing, which could be crucial here) or anything that suggests this has to cause distortion in price (which it seems would be impossible in this transaction had a market of one type of transaction that could only be between two parts of the same corporate person). But it seems RBC's defense will be focused on a much less abstract part of the charges:

RBC’s lawyer said the bank intends to show in court that the trades executed between the various subsidiaries of RBC were done at levels that closely tracked market prices, and were not done to distort the market or inflate profits. 

But whether or not this meets the legal hurdles, for me, the real question is: does doing this actually make financial markets (especially smaller derivative markets like ChicagoOne) 'better' markets? Right now, I'm not sure this does anything to help that project. Instead, it looks like a potentially slam dunk case for CFTC, but one that seems to go after conduct that RBC honestly thought was legal on the securities side.

Strangely, Canadian banking regulators aren't eager to take on RBC. And--even more surprising--I can't find any press on whether or RBC's securities transactions violate Canadian tax law. I would guess that this transaction--seemingly a classic form of tax avoidance--would be legal under Canadian law.

Scroll through or download the CFTC complaint against RBC here.

North America’s Shale Energy Stockpiles: Ohio Enters The Game—But Is it too Late, and Will State Politics Get in the Way?

by Keith Edmund White, Editor-in-Chief

With all the chattering over Canada’s oil sands, it’s important not to forget what natural resource literally ties Canada and the United States: shale gas. This resource, while perhaps not as pronounced on the public mind as black-gold brother, has gained prominence over the last decade. For most readers, T. Boone Pickens—and the numerous commercials he generated extolling naturally gas—may have been your first brush with shale.. But now even CNN’s Fareed Zakaria has seemingly blessed this energy shift: noting not only can shale gas production be done responsibly, but could serve as a geo-political stabilizer: with energy-hungry nations like the United States and China not having to be as dependent on keeping oil on the market from more volatile regions on the globe. And, as Canada’s showing, shale brings with it job and GDP growth (refer to page 27). While Canada’s oil sands grab the headlines, it’s clear the natural gas—promising less environmental impact—is trying to give it a run for its dominant role on the global energy stage.

And now Ohio is in on the game. And it’s bringing about its own interesting energy-state politics. First, the geology. Ohio sits—along with about 7 other U.S. states and Ontario—on the Utica shale gas reserves. How much is there? Apparently a lot. And in Ohio is pushing to up its 7-wells, and try to get in on the shale boom.

But this is where the state politics come in. Ohio Gov. John Kasich, not known as a moderate in his former Congressional career and now still-short tenure, has used the issue to show off his inner populist. His plan: finance a across-the-board income tax cut with increased taxes on drilling, which—it should be noted—admittedly Ohio already accessing this ‘severance tax scheme’ at a lower rate than other States. But, alas, Kasich finds himself fighting his own party over the tax proposal, with others calling the tax-proposal a possible killer of shale’s potential for spurring Ohio economic growth.  Whether Kasich populist pivot results from conviction or political necessity is debatable, but in the result is the same:  Kasich is pushing shale gas in a way that presumably will be supported by most Ohio voters.

Now there are two things to consider when assessing the virtues of natural gas. On the macro-scale, its undoubtedly true that natural gas is clean than oil—but, is using natural gas as a crush keeping the American economy from entering its green phase? On the ground in Ohio, there are two far less abstract questions. First, is the market to awash in natural gas?  As pointed out in John Funk's The Plain Dealer Nov. 2011 piece, Ohio might be too late to the party to enjoy a true shale boom:

The problem for Ohio is that the gas industry has been too successful over the last three years at developing shale gas in other parts of the nation, using technologies to drill horizontal wells and then fracturing, or "fracking," the rock to release the gas. 

Now there is too much of the stuff. The glut is growing and prices are falling. Those are the facts. Additionally, no one knows for sure how much gas -- or more valuable oil and other hydrocarbons -- lies trapped beneath Ohio. "The issue for the Ohio economy is whether there is enough demand for natural gas to permit development. It's not a question of whether it will create 150,000 jobs or 170,000 jobs but a question of whether it will happen at all," said Andrew Weissman, executive director of Energy Business Watch, a national private analytical service for energy investors. 

"It will happen on some scale," he added. "But the question is whether it moves quickly or whether it moves slowly so that it has only a modest impact on Ohio's economy."

And second, are Ohioans being over-sold on the economic benefits? Yes, with gas comes drilling operations, leasing and royalties, and pipeline infrastructure (all of which equal more jobs—especially for lawyers!). But, as this OSU report makes clear, while a short-term of income burst is to be expected in drilling areas, shale gas development’s ability to create long-term job-creation is dubious at best (and still comes with some not-fully understood environmental impacts) (refer to pages 15 and 27).  One fascinating statistic: Pennsylvania counties with drilling actually had less job growth than non-drilling countries, though both saw roughly equal income growths over 2000-2010.  Assuming this is trend  continues in Ohio, Governor Kasich’s plan makes sense: use the short-term income boast to simulate growth (income taxes) or some smart government-spending that can actually lead to sustainable job creation.

In any case, shale is here to stay. And with it, at a minimum, will come even more links between Canada and the United States.