Proposed ban on ‘unethical’ oil could end up backfiring on Alberta

Arbitrary trade policies could throw global system into chaos, writes Helmut Mach.

The proposal by the Wildrose trade critic to ban imports of “dictator” oil from countries considered to have undesirable human rights status, or for being “unethical,” is a poorly thought out proposal, fraught with dangerous implications and potential consequences.

The “unethical” import restriction idea flies in the face of 45 years of Alberta trade policy that has consistently championed trade liberalization and increased market access while rejecting protectionism and import restrictions.

The proposal also is inconsistent with some seven decades of international trade rule development under the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO), which have sought to ensure that a rules-based, impartial, non-discriminatory trade environment worked for all countries to reap the benefit of trade liberalization.

There is good reason why the GATT “morals” exception of Article 20 (a), to allow import restriction based on arbitrary “ethical” or “moral” reasons, has virtually never been used and has no GATT case law associated with it.

The reason is that all members of the GATT recognize the perils of going down this road. If one country started to impose arbitrary, self-defined, unilateral import restrictions based on its own standard of how other countries should govern themselves, then soon other countries would do the same and the world trading system would be in chaos.

Major trading sanctions have resulted from internationally recognized situations that required unified, multilateral response, such as sanctions on North Korea, or dealing with situations such as apartheid, in the past. Co-ordinated, agreedupon sanctions should only be put into place through multilateral organizations such as the United Nations.

Unilateral, arbitrary restrictions will lead to problems for all. It takes very little movement to go from “ethical” trade, to “fair” trade, as self-defined by which ever government wants to restrict imports. The current discussion in the United States focuses on this “fair” trade idea and with it, a possible 20-percent border adjustment tax, to make things “fair” for U.S. industries.

Such a tax would be devastating for Alberta and Canada for all its products, oil or otherwise.

Self-defined “ethical” justifications could lead to poorly informed or ideologically motivated restrictions based on views of Alberta being “unethical” in the way it manages its resource development, for example, the degree of clear-cutting in forestry, habitat destruction caused by forestry and energy exploration affecting woodland caribou and grizzly bears, any forestry or energy development without explicit consent or approval by any and all indigenous groups, agricultural practices involving drugs or chemicals considered “undesirable,” and oilsands development contributing to emissions growth being unacceptable at any level.

Trade restrictions need to be considered in light of explicit trade rules, fully documented and justified, and if imposed for certain “moral” or “ethical” ideas, done only in the context of internationally agreed upon sanctions through a multilateral forum.

Prospective governing parties, and current governing parties, need to consider two basic principles — trade restrictions usually harm the jurisdiction imposing the restriction as much as the other jurisdiction; Self-defined and arbitrary justifications for trade restrictions usually will come back to haunt and bite the jurisdiction using them.

All potential governing parties in Alberta should maintain their commitment to trade liberalization, and focus on market access and not try to justify arbitrary import restrictions.

Unilateral, arbitrary restrictions will lead to problems for all.