NAFTA three amigos face Trump

Obama, Trudeau, Nieto, without mentioning Trump by name, make case for the benefits of free trade, set bold new emissions targets

GARY PARK

For Petroleum News

Operating in a shadow cast by Donald Trump, the so-called Three Amigos - the leaders of the United States, Canada and Mexico - took a bold stand in defense of the North American Free Trade Agreement and set new trilateral goals for reductions in greenhouse gases at their summit in Ottawa.

Trump tried to derail the agenda by rating NAFTA as the “worst trade deal,” insisting that Canada and Mexico were “used to having their own way” in their negotiations with the U.S.

“Not with Trump” as president, he said, demanding that NAFTA be renegotiated, failing which the U.S. would withdraw.

Trump said he wanted a better deal for U.S. workers and said, “I don’t mean just a little bit better, I mean a lot better.”

Canadian Prime Minister Justin Trudeau and Mexican President Pena Nieto said they would work with whoever becomes the next U.S. president, but proclaimed a “shared vision “ and a belief in “regional integration. We believe in free trade.”

Trudeau said trade and closer cooperation “are ultimately good for our citizens, are good for the middle class, are good for growth that matters. ...”

To strengthen Canada-Mexico ties, Trudeau also announced his government will lift visa requirements, imposed in 2009 on Mexican travelers, by Dec. 1.

While none of the leaders referred to Trump by name, Obama said a populist is someone who stands up for workers, advocates for social issues and economic opportunity for all, not someone who says something controversial to win votes.

“That’s nativism, or xenophobia, or worse,” he said.

The trio resoundingly rejected the anti-globalization message by Trump, although Obama and Nieto acknowledged that the benefits of free trade and globalization have not filtered down to average citizens, with Obama delivering a lengthy lecture in which he said ordinary people have a “legitimate gripe about globalization” because of rising inequality.

There was also a clear indication that Obama and Nieto were applying pressure on Trudeau to gain his endorsement of the Trans-Pacific Partnership, which Trump has said is a “continuing rape of our country,” while Hillary Clinton has said she will seek to renegotiate the terms.

The leaders committed to a North America-wide goal of having 50 percent of all electricity generated from clean-energy sources by 2025, up from the current 37 percent; a reduction in methane emissions from the oil and gas industry of 40 percent to 45 percent; and cuts in two other GHGs.

They also agreed to collaborate on research and development projects aimed at commercializing clean technology, including projects such as energy storage, and the capture of carbon dioxide for use as industrial feedstock or for sequestration underground.

“This partnership will see our countries stand side by side as we work towards the common goal of a North America that is competitive, than encourages clean growth and that protects our shared environment now and for generations to come,” Trudeau said.

Obama said the target for a lower-carbon electricity system - including renewable and nuclear energy, carbon capture and storage and lower demand - is a “bold move, but an eminently achievable one.”

But he acknowledged that it will require the construction of transmission lines across the continent to meet its potential.

Canada - which exported about two-thirds of its oil and natural gas to the U.S. for many years until the shale revolution shifted that balance to the U.S. - enjoys a C$3 billion surplus in electricity trade and expects those could double or triple over the next 15 years if the transmission infrastructure is built, said Sergio Marchi, chief executive officer of the Canadian Electricity Association.

Tim McMillan, chief executive officer of the Canadian Association of Petroleum Producers, said the North America-wide energy strategy does not trouble his member companies regardless of the aggressive targets to reduce carbon emissions.

He said the pact would have a positive effect on Canada’s energy industry because producers are already under pressure to reduce methane emissions and pay carbon levies.

“Having our competitors (in the U.S. and Mexico) held to a similar standard is going to be good for all of us,” he said.

McMillan also said that demand for oil is growing globally and Canadian producers are focused on capturing more of the global market.

A TransCanada spokesman said his company welcomes the agreement, citing its growing natural gas pipeline business in Mexico and its recent acquisition of Columbia Pipelines in the U.S. as evidence of the need for an interconnected system.

Erin Flanagan, federal policy director at the Alberta-based Pembina Institute, said Canada holds a considerable advantage in changing the energy mix, with 81 percent of its total electricity production rated as clean by the standards agreed to, compared with 33 percent in the U.S. and 18 percent in Mexico.