​Canada's new ambassador to the United States says the relentless focus on the Keystone XL pipeline project has strained Canada-U.S. relations, making it difficult for the two countries to make progress on other major initiatives.

"There's no question that that particular dispute sucked all the oxygen out of the room in terms of the relationship. And you hear that, I'm not just talking about from Canadians and I don't think it's a partisan comment, you hear it from the Americans, too," David MacNaughton said in an interview with Chris Hall on CBC Radio's The House

MacNaughton, who was a lobbyist before being appointed by Prime Minister Trudeau to the top job in Washington earlier this year, says assigning blame for the diplomatic headache is difficult, but regardless of who is responsible, it has had a measurable impact.

"It definitely was such a focus — and such a contentious focus — that so many of the other things that we do, and should do, day in and day out, kind of got either stalled or put to the back burner," he said. "The reality is, for whatever reason, it sidetracked the relationship." 

The new ambassador, a longtime Liberal fundraiser and Trudeau's Ontario co-campaign chair in the last election, said that the dispute between the two countries is equivalent to that of a familial relationship gone awry.

"It happens in personal relationships as well as when you have good friends, or your family, sometimes when there are irritants you tend to focus on the irritants and then they become more irritating," MacNaughton said in an interview in his office at the Canadian embassy in Washington.

After years of indecision, President Barack Obama killed the project in its current form last November — rejecting TransCanada's application to build the Keystone XL pipeline citing environmental concerns.

Obama Keystone composite

Obama rejected the Keystone XL pipeline Nov. 6., stating it was not in the interests of the United States. The focus on the pipeline for many years 'sucked all the oxygen' out of the Canada-U.S. relationship, Canada's new ambassador says. (Evan Vucci, Nati Harnik/AP)

Former prime minister Stephen Harper was a vocal proponent of the project, once calling it a "no-brainer."

TransCanada has since filed a NAFTA lawsuit against the U.S. for the rejection, and it hopes to collect some $15 billion indamages to compensate for the seven-year saga.

Progress on less 'sexy' files

But one of the foremost experts on Canada-U.S. relations, and the top adviser to the Canadian American Business Council, says that the pipeline project did not completely sully relations.

"I reject that, I reject the idea, yes it dominated the headlines but when you look at what has been accomplished in Canada-U.S. relations in the last several years, a couple of major initiatives are underway, and I'm pleased to say that I think they will continue under the Trudeau government," Scotty Greenwood said in an separate interview with The House

Greenwood pointed to progress on other fronts, less "sexy" files she concedes, such as the Beyond the Border initiative, that would make it easier to transport goods and services across the border while maintaining public safety and also regulatory harmonization.

Canada's new ambassador to the U.S.9:41


How to follow Trudeau's Washington visit

CBCnews.ca and CBC News Network will have live coverage of Prime Minister Justin Trudeau's White House visit on Thursday morning and the state dinner in the evening. You can also follow CBC's live blog.

The National with Peter Mansbridge (10 p.m. on CBC Television; 9 p.m. ET on CBC News Network) and Power & Politics with Rosemary Barton (5 p.m to 7 p.m. ET on CBC News Network) are broadcasting live from Washington with news and feature interviews. And The House with Chris Hall wraps up the week in Washington Saturday at 9 a.m. on CBC Radio One.


She says the fact Trudeau will be hosted by Obama at a state dinner this week is a chance for the two countries to reinvigorate relations, and focus less on disputes in the remaining months of Obama's term. The two leaders are expected to unveil a new joint agreement on climate change and the environment, among other announcements.

"It hasn't always been Keystone, but occasionally there's an irritant that tends to define how Canadians view the bilateral relationship. For years and years it was softwood lumber ... before that it was Pacific salmon. Occasionally there's a dispute," she said. 

Softwood lumber

A softwood lumber trade dispute might have been one of those irritants in the past, but it has the potential to rear its ugly head once again now that the last agreement has expired and Canada is in the midst of a sort of grace period.

U.S. lumber companies oppose the import of softwood claiming Canadian companies have an unfair advantage with their preferential access to Crown-owned lands. The prices charged by provincial governments to harvest the lumber — the stumpage fee — are set administratively rather than on the open marketplace.

Americans says this is an unfair form of subsidization that makes its hard for their companies to compete. 

MacNaughton says he is already preoccupied by this issue, after having been on the job for less than a week. 

"We are working hard to make some progress on that file but it is very, very difficult. I do not believe we are going to see any breakthroughs this week," he said. 

"I've met with the White House about this, we're trying to chart a path forward that has a high degree of possibility of success but it's tough. It's in the U.S. industry's interest to avoid a long, litigious thing. The only thing that's good for, it's good for lawyers."