While Prime Minister Stephen Harper is in China this week trying to open doors for new bilateral trade and investment opportunities, his government is quietly reviewing plans to padlock some of Canada’s consulates in the United States.

Sources tell CBC News that up to eight Canadian consulates and trade offices in cities across the U.S. could be closed by the end of the year.

A final decision will be made by the federal cabinet in time for the Conservative government’s next budget, expected in March.

Insiders say six of the most likely targets are satellite consulates — Philadelphia, Anchorage, Houston, Raleigh, Phoenix and San Diego — opened in 2004 by the then Liberal government of Paul Martin.

Canada currently has a total of 21 consular and trade offices in the U.S., plus the main embassy in Washington.

Those operations have more than 1,000 diplomats and local staff on the payroll, at least a quarter of whom work at the Washington embassy.

Foreign Affairs says the consulates alone currently cost taxpayers over $66 million a year, while the Washington embassy takes another $24 million annually from the public purse.

Those costs include rent for the consular offices, salaries, wining and dining, limos, several dozen diplomatic mansions — and other expenses.

Spending criticized

For example, a recent Foreign Affairs audit slammed one consulate in the U.S. for spending more than $7,000 a year on flowers for its executive suite.

Gar Pardy, retired head of consular services at Foreign Affairs, says he understands why Canada’s network of consulates and embassies is a favourite target of government cost-cutters.

"The average price for one Canadian officer is $400,000 a year. Then you have the infrastructure that needs to go along with that."

But he cautions against closing diplomatic outposts simply because of shifting trade priorities, noting that Canadian missions also provide services such as immigration, passports, legal assistance and communication with foreign governments.

“Trade is an important service, but there are a whole bunch of others you need in place…on the ground to assist Canadians when they need a service.”

The plan to close some of Canada’s diplomatic outposts and downsize others in the U.S., Europe and possibly Africa is mainly being forged by the Conservative government’s promise to cut federal operating costs by up to 10 per cent.

The entire budget for Foreign Affairs this year is about $2.6 billion.

That means the department has to find at least $260 million in savings just to reach its budget targets.

Closing every Canadian consulate in the U.S. wouldn’t save anything close to half that amount.

But the move to cut diplomatic services south of the border is about more than direct savings in limos and canapés.

Shifting focus

It is also linked to a broader shift in the focus of Canadian trade and foreign policy away from the struggling economies in the U.S. and Europe, and more towards the rapidly growing markets in Asia and South America.

Harper is taking that message directly to China this week.

“Diversifying our markets is a key priority for Canada,” Harper told reporters in Beijing.

“We look forward to expanding our co-operation in many important areas including energy and natural resources, tourism and education.”

John Manley has seen Canada’s diplomatic and trade operations from both sides – he was foreign affairs minister in the Chretien government, and today heads a powerful business lobby group, the Canadian Council of Chief Executives.

Manley says that while he understands the government’s desire to cut costs, the issue for business is one of consistency.

“I think the problem here is that we are terribly inconsistent with our approach,” Manley said in an interview.

“Many of the U.S. consulates have been opened in the last ten years in an attempt to reassert Canada’s presence in these markets. Now we’re pulling back again.

“I think for a lot of businesses it would be nice to see consistency and follow through for a longer period of time.”

Manley does agree with the Harper government’s putting more trade resources into helping Canadian companies in emerging markets, particularly in Asia where foreign businesses face particularly difficult barriers of language, culture and regulation.

“Those are markets where even large businesses need the assistance of Canadian representatives to make the appropriate contacts to deal with what are often regulatory governmental complexities in those markets that maybe don’t pertain so much to the United States,” he says.

No hard feelings

Manley and others involved in Canada-U.S. relations say they doubt official Washington will feel jilted by the closure of some Canadian consulates in that country.

Former U.S. ambassador to Canada David Wilkins says the decision is entirely Canada’s to make.

“We are for free enterprise, and if Canada sees opportunities with other markets, no one can blame them for exploring that. I certainly don’t have an issue, any problem with Canada looking elsewhere.”

But Wilkins is quick to add that no one on either side of the Canada-U.S. border is likely to abandon one of the world’s most successful trading partnerships anytime soon.

Fact is, while Canada’s trade with China is on the rise, it still represents only about one-tenth the value of commerce between the U.S. and this country.

Foreign Affairs won’t discuss any possible consulate closures or other cuts still before cabinet.

Spokesperson Rick Roth says only that “no decisions have yet been made.”

Greg Weston can be reached at greg.weston@cbc.ca.