THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, November 1, 1995 TAG: 9511010453
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY BILL SIZEMORE, STAFF WRITER
LENGTH: Medium: 87 lines
Canada-watchers say the Hampton Roads economy dodged a bullet when the citizens of Quebec voted by a tiny margin Monday not to secede from the Canadian federation.
If the experts were right, a ``yes'' vote would have undermined a lucrative trading partnership that brought Virginia more than $1 billion in export revenue and $57 million in tourism dollars last year.
One of the biggest sighs of relief Tuesday came from Hester Waterfield, tourism marketing manager for Virginia Beach. If Quebec had voted for independence, she would have been bracing for tough times.
Many financial experts had been predicting a near-panic in the money markets if the separatist side had won. The conventional wisdom was that the Canadian dollar, now trading at about 75 U.S. cents, would have plummeted to around 65 cents.
That would have made a Virginia Beach vacation much more expensive for Canadian tourists.
In a peak year, Virginia Beach attracts up to 200,000 Canadian visitors. That's about one in 10 of the beachgoers who flock to the resort city in a season, and about two-fifths of the nearly 500,000 Canadians who visited Virginia in 1994, spending an estimated $57 million.
``It's a very lucrative market for us,'' Waterfield said.
About 60 percent of the Canadian beachgoers come from French-speaking Quebec, she said, prompting Virginia Beach to publish a bilingual promotional brochure aimed at French-Canadians.
But over the past year, as the gap between the Canadian dollar and its U.S. counterpart widened, the volume of Canadian tourists slacked off, Waterfield said. Now, in the wake of Monday's ``no'' vote, she is hoping for a rebound.
The financial markets' early reaction Tuesday was encouraging. The Toronto Stock Exchange composite index shot up 132.60 points to 4,512.30, while the Canadian dollar hit 74.46 U.S. cents, up 0.88 of a cent from the close Monday.
Another hopeful observer is Martin Briley, international marketing director for the Virginia Department of Economic Development.
Canada is Virginia's biggest international trading partner. Two-way trade between the two hit $2.3 billion in 1994. The state exported $1.16 billion worth of goods to Canada - up from $802 million in 1990 and more than 10 percent of all Virginia exports. The diverse roster of goods was led by motor vehicle parts, chemicals and machinery.
In one sense, Virginia has benefited from the political upheaval that has rocked Quebec in recent years, said Wilson Sheridan, president of the Canada-Virginia Business Association. A Canada native, Sheridan is an attorney in the Richmond firm Mays & Valentine.
``A number of businesses have chosen in the last 10 or 15 years, because of the political instability in Quebec, to open up branch offices in places other than Quebec,'' Sheridan said. ``A lot of them have moved down into the states, primarily along the East Coast, including Virginia.
``I would imagine that movement will continue. It may accelerate a little bit.''
Sheridan is cautiously optimistic that the Canadian government will move to defuse the separatist fervor in Quebec in the wake of Monday's close call.
``I think now the federal government will attempt to placate the French element in Quebec by giving them some recognition that they are what they call this `distinct society,' '' he said.
But the Quebecois drive for independence won't be easily sidelined, he added.
``It's a cultural thing. It's not economic. They are a very culturally proud people that were beaten by the British 200 years ago at the Plains of Abraham in Quebec City, and they have a chip on their shoulder. And it's not going to go away.''
If the secessionists ever get their way and the predicted weakening of the Canadian dollar comes to pass, Sheridan shudders at the implications for the U.S. side of the trade ledger.
``Canadian lumber would be a lot cheaper than American lumber, and the Canadian lumber would come down and put out of business an awful lot of the American pulp and paper and lumber people,'' he said. ``And if we try to sell, say, 400,000 cars up there a year, because the dollar is devalued it means those cars are 20 percent more expensive and they're not going to be able to afford them.
``It's a very big trading relationship, and if that balance is unsettled, it would have major repercussions here.'' ILLUSTRATION: Color graphic
by CNB