10/24/2012 02:45 EDT | Updated 12/24/2012 05:12 EST

Fiscal Cliff A Major Issue For Canada In U.S. Election: Ambassador

VANCOUVER - One of the most important issues for Canada in the American election will be whether the winner can avoid sending the U.S. economy over a so-called "fiscal cliff," says Ottawa's representative in Washington.

Ambassador Gary Doer, in Vancouver on Wednesday to speak to the city's board of trade, declined to say just which candidate or party he feels is best equipped to break an ongoing budget impasse in Congress — which could trigger tax hikes and deep spending cuts.

But Doer, a former Manitoba premier who's been ambassador for the past three years, said he's been hard at work preparing for a number of possible election outcomes depending on who wins control of the president's office, Congress and the Senate.

Any of those scenarios would have a significant impact on Canada's economy, he said.

"That's what we're focused in on," Doer told reporters after his speech.

"Who's in all three of those bodies that will have to come together to make sure the fiscal cliff is not a situation that represents a decline in GDP in the United States, and by definition, results in a decline in demand for Canadian products because of that."

President Barack Obama and Congress are currently deadlocked over the U.S. budget, and many observers have feared if a deal isn't reached by the deadline of Jan. 1, the automatic tax increases and spending cuts could reverse progress in the economic recovery.

The winners of the Nov. 6 election won't take office until the new year, but Doer suggested the election results will influence if a deal is reached.

"Whether they get an agreement before Jan. 1 or shortly after that, we believe that it's very important for them to get an agreement," said Doer.

"It's very short-term, but it is real, and it will create a lot of uncertainty if they don't manage it."

Doer also noted another possible threat to the U.S. — and Canadian — economic recovery will come early next year, when Congress will need to raise the federal debt ceiling. The previous debt-ceiling standoff in 2011 was resolved at nearly the last minute, narrowly averting a first-ever default by the U.S. government.

Doer told the board of trade gathering he's confident he'll be able to work with whoever is sitting in the White House following the election, whether it's Obama or his Republican challenger, Mitt Romney.

"We do know a lot of the people in both potential administrations," he said.

"We are preparing for potential scenarios in the Congress, potential scenarios in the Senate, potential scenarios in the administration."

Doer also said he is optimistic about the economic recovery in the United States, pointing to rising housing values, an increase in housing starts and decreasing household debt.

"I definitely believe that the U.S. economy is going to be coming back over the next period of time," he said.

— With files from The Associated Press

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