An energy elephant?
Terence Corcoran, National Post Published: Thursday, April 24, 2008
Canada, the mouse that sleeps next to the U.S. elephant, seems to be feeling a bit elephantine itself these days. "PM Plays Energy Card," said the big headline on the front page of the National Post yesterday. The story said Prime Minister Stephen Harper had "issued a direct warning" to the United States over the prospect of reopening NAFTA.
Canada will drive a tough bargain on any future post-NAFTA negotiations, said another report, picking up on Mr. Harper's muscle-flexing tone during the Canada-Mexico-United States summit in New Orleans. Noting that Canada is the No. 1 supplier of energy to the United States, Mr. Harper said that if Canada did have to look at re-opening NAFTA "we would be in an even stronger position now than we were 20 years ago. And we will be in a stronger position in the future."
Sounds tough-- although it's not clear from Mr. Harper's remarks exactly what game he's trying to win by playing the energy card. Is he in favour of re-opening NAFTA and using energy to knock the American's down as an opening gambit? Or is he actually opposed to the idea and is trying to spook Americans, especially the Democratic leadership demagogues, into backing down from their threats to walk away from NAFTA?
While it's hard to tell what Mr. Harper's motives are, even less clear is the trade and economic strategy behind the chest-thumping swagger and arrogance that's been creeping into Canadian policy circles in recent months. Ever since the Democratic leaders began competing over who will get out of NAFTA first, former Canadian mice have been pressed up against the border, rattling their energy swords as if free trade were a battle of might and brawn and stockpiles of energy resources.
"You want to renegotiate NAFTA? This Canadian internationalist says: "Bring it on!" So declared former Liberal foreign minister John Manley, establishing the new elephantine swagger in Canadian trade circles.
Toronto trade lawyer and Osgood Hall Law professor J. Michael Robinson said energy is "the ace in the hole for Canada" in any new NAFTA talks. Trade Minister David Emerson said that if the United States wanted to reopen NAFTA, Canada would have its list of "priorities" -- i.e. demands -- on the table, and woe the hapless Americans on the other side. "Knowledgeable observers would have to take note of the fact the we are the largest supplier of energy to the United States," said Mr. Emerson.
The Prime Minister actually raised the energy flag over NAFTA earlier in the year, adding a tricky bit about carbon emissions and Kyoto. Canada is the largest supplier of energy to the United States, but the United States doesn't have as firm a commitment to carbon emissions reductions as Canada. Implying what, exactly?
The National Post's editorial board has been beating the energy drum, as if free trade were a war. American dependence on Canadian energy gives Canada an "oil card" and a "trump card" and a "very big club," but one that should be used only when the time is right. "It is not yet time, though, to play hardball. For now, Ottawa should concentrate on gently making American legislators aware that good ole reliable, stable, friendly Canada is their #1 energy partner."
It's worth reviewing this buildup of trade sabre-rattling, this escalating sense of national potency, if only to draw attention to the unstated, unacknowledged and unexplained strangeness of it all. Exactly what is Canada proposing to do in any self-important confrontation with the United States over energy?
The implication running through the steamy bring-it-on rhetoric is that Canada plans to be the first nation in the history of global free trade negotiations to enter talks with an open-ended blanket threat to cut off its main export products.
Somewhere in world trade deals there is likely a clause the prevents such action, short of circumstances such as war. Otherwise, what kind of negotiating position does Canada plan to take? Give us free access to your farm sector or we cut off gas through to Chicago? Open up national security contracts to Canadian tech firms or we prevent Exxon from shipping oilsands output across the border?
By setting oil and gas and tar sands on the table as bargaining chips and trade threats, the Harper Tories are also implying that the energy resources across Canada belong to the federal government. Mr. Harper has, for trade purposes, essentially nationalized Alberta and Newfoundland resources and announced he would play them, as a threatening move, in a trade deal.
This is trade talk turned into trade war. Under the current NAFTA agreement, Canada has a deal that protects the ability of Canadian resource owners (provinces and private players) to trade freely in energy products. That free trade flow could be disrupted under certain conditions, sanctioned under international law. But the principle is one of free trade upheld, not of trade denied. The new Canadian power play, under the new bloated sense of control and power, is to threaten to block free trade and withhold exports to achieve some other objective.
As part of this game, another idea is that Canada could threaten to ship oil to China rather than the United States. Are such decisions national ones made by Ottawa, or private commercial decisions made by industry players? Or maybe this is part of the Harper Tories' occasionally stated objective of becoming an "energy superpower," with Ottawa controlling the business in the same way as Moscow controls Russia's energy assets.
We clearly need more information on the plan to play the energy card. Meanwhile, the only conclusion is that the plan is dangerous and silly, or a bluff by a self-inflated elephant.
http://www.nationalpost.com/opinion/columnists/story.html?id=f2433c69-2aff-4557-bf1a-c78f63291eb5&k=482&p=2