Stephen Harper: NAFTA — schmafta

Threats by Obama, Clinton to opt out of, or renegotiate free trade pact prompt tit-for-tat warnings that the free flow of oil, gas and pipeline expansions could be at risk; others say U.S. politicians miss point when blame NAFTA for manufacturing job losses

Gary Park

For Petroleum News

Canadian Prime Minister Stephen Harper has a sharp response to talk about renegotiating the North American Free Trade Agreement.

“If any American government ever chose to make the mistake of reopening (NAFTA) we would have some things we want to talk about as well,” he said, hinting at the United States’ refusal to abide by dispute-settlement rulings on softwood lumber.

Trade Minister David Emerson challenged talk by Hillary Clinton and Barack Obama that, if elected president in November, they would “opt out” of NAFTA within six months unless Canada and Mexico strengthened the labor and environmental provisions of the pact.

He said Canada could end up putting any issue on the table — including the free flow of oil and natural gas across the 49th parallel — in seeking its own concessions.

Under current NAFTA terms Canada is forbidden from rationing oil exports to the U.S. in the event of a supply disruption or global shortage, unless proportional cutbacks are imposed on Canadians — already a sore point among Canadian nationalists who see the U.S. draining petroleum resources.

Canada tops billion-barrel mark

It said Canada for the first time last year topped the billion-barrel mark for production, reaching 1.01 billion barrels, up 4.2 percent from 2006, working out to 2.77 million barrels per day including bitumen and associated natural gas liquids.

Exports claimed two-thirds of that output, up 3 percent.

Natural gas volumes slipped 2 percent to 5.9 trillion cubic feet, but exports rose 7 percent to 3.9 tcf.

“Worldwide demand for Canada’s natural resources and raw materials is keeping prices high and fueling capital spending in the primary sector and the related downstream industries,” the federal agency said.

Derailing years of efforts to build a free and integrated continental energy market comes at a bad time for pipeline companies who have billions of dollars worth of projects on the line in answer to demands from U.S. Gulf Coast refineries for greater volumes of heavy oil and bitumen from Canada.

They are expected to spend C$3 billion this year and C$29 billion over the 2008-12 period, largely directed at U.S. markets.

However, Canadian Natural Resources President Steve Laut said Feb. 28 that the prospect of a NAFTA battle appears to be “mostly politics.”

“Knowledgeable observers would have to take note of the fact that we are the largest supplier of energy to the U.S. and NAFTA has been the foundation for integrating the North American energy market,” Emerson said.

“When people get below the rhetoric and pick away at the details, they are going to find that (renegotiating NAFTA) is not such a slam-dunk proposition,” he said.

Canadian officials: NAFTA not to blame

Gary Mar, a former Alberta cabinet minister and now the province’s representative in Washington, D.C., said that “if you want to know where the jobs went from Ohio, don’t look to Canada or to Mexico, but to China. I can’t imagine that (Clinton and Obama) don’t know that.”

In fact, since 2000 Ontario, Canada’s most populous province and industrial heartland has lost 180,000 manufacturing jobs and could shed another 250,000 in the next five years, with Quebec facing a reduction of 100,000 over the same period, the Toronto-Dominion Bank has forecast.

The bank’s director of economic studies Derek Burleton, while blaming the stronger Canadian dollar for some of the woes, said the bigger culprit has been the globalization of the manufacturing industry and has nothing to do with NAFTA.

Derek Burney, once a top aide to former Prime Minister Brian Mulroney and later Canada’s ambassador to Washington, was involved in the final NAFTA negotiations.

In a Globe and Mail article, he noted that 76 percent of Canadians preferred Clinton or Obama as the next U.S. president — but that was before Feb. 26 when the two candidates took their stand on NAFTA.

Burney said Canadians should be on guard to challenge “any prospective president pandering for votes, but Americans should be equally careful in calculating the real impact a reopening of NAFTA might have on an increasingly integrated North American economy.”

Not least, he said, echoing Emerson, the U.S. should consider its growing reliance on Canadian energy supplies.

“America’s ‘lost jobs’ are likely going to China and India, not Mexico or Canada,” he said. “More than a decade ago, Al Gore demolished similar criticisms about NAFTA during his debate with Ross Perot. Perhaps it is time he shared another ‘inconvenient truth’ with his fellow Democrats.”