A devil’s bar­gain

The Western Star - - Editorial -

Don­ald Trump is known for tweet­ing al­ter­na­tive facts. But oc­ca­sion­ally, per­haps in­ad­ver­tently, he gets it right.

When he ap­proved the build­ing of Tran­sCanada’s pro­posed Key­stone XL pipe­line, Trump said it would “re­duce our de­pen­dence on for­eign oil.” Given that the pipe­line would be filled with mainly Al­berta bi­tu­men, Trump re­vealed that he thinks Cana­dian oil is Amer­i­can oil.

Un­for­tu­nately, it’s vir­tu­ally true. NAFTA’s pro­por­tion­al­ity rule (Ar­ti­cle 605) gives Wash­ing­ton vir­tu­ally un­lim­ited, first ac­cess to most of Canada’s oil and nat­u­ral gas.

Cana­dian dis­cus­sions of the up­com­ing NAFTA rene­go­ti­a­tions fo­cus on dairy farm­ing, soft­wood lum­ber, buy-Amer­i­can pur­chas­ing poli­cies, and trade dis­pute panels. They are im­por­tant, but Canada is play­ing de­fence on them. A hockey team that only plays de­fence loses. Fac­ing off with a U.S. pres­i­dent who boasts he is the win­ner who takes all, Canada must make its own de­mands.

At the top of the list, Ot­tawa should de­mand the same ex­emp­tion from NAFTA’s en­ergy pro­por­tion­al­ity rule that Mex­ico has. Jean Chré­tien won the 1993 fed­eral elec­tion partly on this prom­ise, but caved when Bill Clin­ton re­sisted.

NAFTA’s pro­por­tion­al­ity rule ob­li­gates Canada to make avail­able to the U.S. the same share of its oil and nat­u­ral gas as it has in the pre­vi­ous three years. Cur­rently, it’s over 50 per cent of our nat­u­ral gas and 75 per cent of our oil.

No other in­dus­trial coun­try has signed away first ac­cess to its en­ergy re­sources.

No won­der. Un­der pro­por­tion­al­ity, Cana­dian ex­ports of oil and nat­u­ral gas can rise or fall through “mar­ket” changes — es­sen­tially de­ci­sions by Big Oil — but Ot­tawa can­not as a mat­ter of pol­icy, re­duce car­bon en­ergy ex­ports to cut green­house gases, or re­di­rect do­mes­tic oil to dis­place oil im­ports to East­ern Canada, as it did dur­ing the oil sup­ply short­ages of the 1970s.

Be­cause Al­berta Sands pro­duc­tion is so costly, Euro­pean and U.S. oil cor­po­ra­tions are pulling out from them. Oil work­ers and their com­mu­ni­ties are left to fend for them­selves. But NAFTA’s pro­por­tion­al­ity rule hin­ders Al­berta and Ot­tawa from phas­ing out the Sands to achieve a soft land­ing and phas­ing in low car­bon al­ter­na­tives, em­ploy­ing laid off and re­trained Sands work­ers to do so.

Canada can­not greatly re­duce its green­house gases if it can’t re­duce its largest source — from the pro­duc­tion of oil and nat­u­ral gas in Canada, es­pe­cially from Al­berta’s Sands.

Oil will likely be­come a mi­nor part of the world’s en­ergy mix by mid cen­tury. But to­day oil is the pri­mary en­ergy source for armed forces.

What would hap­pen to East­ern Cana­di­ans if a Mid­dle East war tem­po­rar­ily halts much of the world’s oil ship­ments through the nar­row Per­sian Gulf? Trump’s pen­chant for un­pre­dictabil­ity raises the chances of a wider war spread­ing from those in Ye­men, Syria and Iraq and ten­sions be­tween Qatar and neigh­bour­ing states.

East­ern Cana­di­ans are vul­ner­a­ble to an in­ter­na­tional oil short­age be­cause they rely heav­ily on for­eign oil to heat their homes and drive their cars, trucks, trains and ships. NAFTA’s pro­por­tion­al­ity clause greatly hin­ders Canada from pru­dently en­sur­ing that they get do­mes­tic, non-fracked, con­ven­tional oil.

Once Canada wins a Mex­i­canstyle ex­emp­tion from pro­por­tion­al­ity, it should direct that tankers ex­port­ing New­found­land’s con­ven­tional oil be rerouted to At­lantic Cana­di­ans and east­ern Que­be­cers in­stead and end oil im­ports in­clud­ing those from the U.S. In an in­ter­na­tional oil sup­ply cri­sis, Trump would ban U.S. oil ex­ports to Canada and else­where and re­di­rect them to Amer­i­cans.

In “The Art of the Deal,” Trump ad­vo­cates know­ing when to walk away. Two can play that game. Canada should en­ter the NAFTA talks to make it bet­ter but keep NAFTA’S six-month exit clause on re­serve just in case.

Gor­don Laxer, found­ing di­rec­tor Park­land In­sti­tute, Uni­ver­sity of Al­berta and au­thor of “Af­ter the Sands. En­ergy and Eco­log­i­cal Se­cu­rity for Cana­di­ans”

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.