COVER

‘One hell of a fight’

MADELAINE DROHAN October 26 1987
COVER

‘One hell of a fight’

MADELAINE DROHAN October 26 1987

‘One hell of a fight’

It was just one line in a presidential address to the New Jersey Republican State Chamber of Commerce. “The Canada-U.S. free trade agreement,” President Ronald Reagan said last week, “is a new economic constitution for North America.” But with those few words, Reagan fuelled an already heated debate in Canada. In Ottawa, Liberals and New Democrats used the President’s remarks as ammunition in their continuing attack on the free trade pact—particularly on its provisions dealing with energy. No less active were supporters of the deal, including the chief Canadian trade negotiator, Simon Reisman, who vowed “one hell of a fight” against the opponents. And as the debate warmed up across the nation, a familiar split developed between the provinces that produce energy and those that consume it.

The opposition argued that by reducing trade barriers the Conservative government would give Americans control of Canada’s resources— and, ultimately, its national economy. Liberal Leader John Turner warned that the United States has been after a continental resource policy for 140 years—and he accused the Conservative government of finally agreeing

to one. NDP Leader Ed Broadbent said that even Mexico, now negotiating a trade treaty with the U.S., has said that it would not sign a deal that went as far on energy as the one reached by Ottawa and Washington on Oct. 3. Declared Broadbent: “In the energy sector, as well as others, the Americans took us to the cleaners.”

Under the terms of the agreement, both sides agreed to establish a continental market in energy resources.

Canada would be guaranteed secure access to the U.S. marketworth $10 billion last year—while the United States would receive secure access to Canadian energy supplies at the same prices as those paid by Canadians. If there is an oil shortage on the continent, such as the one caused by the Arab oil embargo in 1973, Canada would have to share its supplies with the United States. In the United States, those measures are widely popular. Indeed, Reagan administra-

tion officials say that the pact’s energy provisions will help them sell the deal to Congress, which will vote on it early next year.

In Canada, however, the energy issue raised emotional questions about American domination—and also revived long-standing animosities between the resource-rich regions and the energyconsuming provinces, particularly Ontario. Said Glen Toner, a political scientist and energy expert at Ottawa’s Carleton University: “All those national divisions, all those relationships of power, revolve around energy issues.”

Energy had not been central to the debate on free trade until the agreement was made public early this month. Toner, for one, argued that all those involved avoided mentioning energy because it is “an explosive, emotional, political issue.” And P.E.I. Premier Joseph Ghiz said last week that the premiers were never told about the energy provisions, despite eight meetings with Prime Minister Brian Mulroney and federal trade negotiators before the agreement was reached. Premier Howard Pawley of Manitoba backed up Ghiz’s charge—but federal officials insisted that the premiers had been kept informed.

Supporters of the trade pact, and its energy provisions, stressed that securing access to the American market will benefit Canadian producers. They also argued that it merely enshrines existing energy policies and practices. With its Western Accord in 1985, the federal govE ernment had already reversed the policies of previous Liberal governments, in particular the 1980 National Energy Policy, which stressed securing energy supplies for Canadians and keeping domestic oil and gas prices below world levels. That policy was deeply unpopular in the West.

More importantly, claim supporters, the new trade deal will help to

protect Canada from measures contemplated by the increasingly protectionist U.S. Congress to restrict Canadian exports of oil, uranium, hydroelectricity and natural gas. Leading free trade advocate Donald Macdonald, a former federal finance minister, told a meeting of Canadian exporters in Ottawa that avoiding such measures is well worth giving the Americans guaranteed access to Canadian energy. Said Macdonald: “It looks like a pretty fair bargain to me.”

Advocates of the free trade deal also say that it will spur new investment in large energy projects in the Arctic and off the east coast by ensuring access to the giant American market. Said Jerry Angevine, executive director of the Calgary-based Canadian Energy Research Institute: “I don’t see many negatives.” And many westerners, eager for increased exports, welcomed the agreement because it spells an end to previous policies under which western producers were forced to sell oil and gas to eastern consumers at below world prices. Declared economics professor Kenneth Norrie of the University of Alberta: “The energy section of the free trade agreement is the part that I like best: it protects us from Central Canada.”

That protection has sparked uneasiness in energy-consuming provinces such as Ontario and Manitoba. Indeed, Manitoba Industry Minister Victor Shroeder told Maclean's that as a Canadian he “strongly resents being in the same lineup for energy with somebody who wants to air-condition his home in Arizona when I want to heat my home and my children in Winnipeg.” However, Quebec’s traditional worries about secure oil supplies have been offset by the lure of a huge, unrestricted New England market for its hydroelectric exports.

With lawyers and bureaucrats from both countries working out legal technicalities in Washington, it will be weeks before the final terms of the proposed trade treaty are known. Even then, the twin hurdles of ratification by Congress and Parliament remain before such a deal could be implemented. In the meantime, energy will likely be at the heart of the debate in Canada. As Ontario Premier David Peterson said last week, giving the Americans open access to the nation’s energy resources could mean, for better or for worse, “a very different kind of future for Canada.”

— MADELAINE DROH AN in Ottawa with MARY JANIGAN in Toronto and JOHN HOWSE in Calgary

MADELAINE DROHAN

MARY JANIGAN

JOHN HOWSE