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Chretien talks tough on energy as Canada-U.S. softwood dispute flares Canadian prime minister warns that without Canadian energy, Americans “will need a lot of wood to heat their homes” Gary Park PNA Canadian Correspondent
A senior U.S. energy official was making a case in Calgary on Nov. 5 for greater American reliance on Canadian oil and natural gas supplies at almost the same time Canada's Prime Minister Jean Chretien was insisting on the same free trade for softwood lumber that the United States gives to energy.
Vicky Bailey, assistant secretary for policy and international relations with the U.S. Department of Energy, told a Calgary conference Canada will play a vital role as the United States looks for “more stable domestic and hemispheric sources” of energy to reduce reliance on “unstable” OPEC supplies.
“The U.S. cannot address its energy security alone,” she said. “In these uncertain times, we are reassured to know that we can count on each other for supply and security.
“We must ensure that we maintain open and smoothly functioning markets as we face the uncertainties of the war against terrorism,” Bailey told a North American gas strategies conference sponsored by Ziff Energy Group.
About two thousand miles to the east, Chretien was simultaneously accusing the United States of meddling in free trade as he showed his testiness with a growing dispute over softwood lumber.
“I believe that if (the Americans) want free trade in natural gas and oil, they should have free trade in wood, too, because if they were not to have oil and gas from Canada they will need a lot of wood to heat their homes,” he told Parliament.
Energy could be bargaining chip It was the second time in three months that Chretien had hinted energy might be used as bargaining leverage in the softwood feud. He told President George W. Bush in August that the North American Free Trade Agreement should apply equally to lumber and energy.
Rick Borotsik, an Opposition Member of Parliament, said Chretien's comments this week “raised the ante with respect to trade with the United States.”
Chretien deflected the charge, saying it was a “stretch” to draw that conclusion. “I just say that we want good trade relations with the Americans on every aspect of trade,” he said.
But his comments came in the thick of growing tensions with British Columbia Forests Minister Mike de Jong lashing out at the United States, saying the countervailing duties on softwood were “one heck of a way” to treat an ally, adding: “With the Americans as friends, who ....”
The U.S. Commerce Department imposed a 19.3 percent tariff on Canadian softwood in August, accusing Canada of unfairly subsidizing its lumber exports. Last week it announced a further 12.57 percent anti-dumping duty.
BC forest workers laid off Industry officials estimated the penalties would cost more than C$10 billion over a year and price Canadian lumber out of the U.S. market. They said 18,000 forestry workers have so far been laid off in British Columbia alone and the total could reach 30,000 layoffs by Christmas, with mills being closed almost on a daily basis.
By Nov. 7 some of the tensions were easing after Marc Racicot, former Montana governor and Bush's special envoy on lumber, met with Chretien, Canada's Trade Minister Pierre Pettigrew and de Jong.
Racicot set a Christmas deadline for a settlement and although de Jong thought that deadline was overly ambitious, Pettigrew welcomed the changed atmosphere.
“We will proceed as quickly as we can and we are on the same wavelength,” he said. “I have found a man (Racicot) who is reasonable and with whom we can do business.”
Meantime, Bailey said “we feel that Canada is standing right there as our neighbor, right there with us, so we believe this only increases our resolve to have increased trade and investment between the two countries.”
She pledged that Canada “can depend on a reliable, open U.S. market for its growing trade and investment ties.”
Canada will supply 14 percent of U.S. imported oil by 2010 Bailey said the U.S. has projected that by 2010, Canada will supply the U.S. with about 14 per cent of its imported oil, much of that that coming from the Alberta oil sands.
“The estimates of Canada's recoverable oil sands reserves (generally rated at about 300 billion barrels) are substantial and their continued development could become a pillar of sustained North American energy and economic security,” she said.
Bailey also noted that 35 natural gas pipelines already cross the Canada-U.S. border, as well as 21 oil and petroleum product pipelines and 51 electricity transmission lines.
As co-chair of a Canada-U.S.-Mexico energy working group, she said energy security will be on the agenda for the group's meeting in Ottawa next month.
Rod Erskine, E&P president at El Paso Production Co., told the Ziff conference the U.S. — which is expected to increase its crude oil consumption by one-third over the next two decades — could have a “real problem, if the Muslim countries shut off supplies. Now people are waking up to this issue.”
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