Thursday, September 15, 2005
Trade pact cost us a bundle
by David Orchard
Across Canada the price of gasoline rose steadily
over the summer. Recently it shot up another 30%. We
were told that this unprecedented leap was because
Hurricane Katrina in the Gulf of Mexico affected U.S.
Why does a storm in the U.S. drive up Canadian
prices? There was no storm in Alberta. No drilling rigs
were toppled in Saskatchewan. Yet Canadians are now
paying up to $1.44 a litre or over $6 per gallon for
gasoline, more than in most places in the U.S. How can
this be? Isn't Canada an oil and gas producer, the
largest foreign source in fact for the U.S.?
The answer is spelled FTA and NAFTA. Not long ago we
had a made-in-Canada price for energy, Canadian oil and
gas companies, and a 25 year reserve of gas set aside
for Canada's future needs. A cold country, with vast
distances, quite reasonably gave its own citizens a
better price for oil and gas than it charged for export
-- just as Saudi Arabia, Venezuela and other oil
exporting countries do for their citizens.
Abundant energy was Canada's advantage in an era of
world competition. China has cheap labour, the U.S. a
warmer climate. Canada had energy.
All of that changed in 1988 when Canada, for reasons
unknown to most of its citizens, signed the Canada-U.S.
free trade agreement (FTA) and with the stroke of a pen
gave away control of its energy.
The energy terms of the FTA bear repeating.
Canada abolished its reserve requirements for its own
future needs -- so all of our reserves can now be
exported -- and agreed to never charge the U.S. more for
exports of energy than it charged Canadians. In
addition, if Canada faced a shortage of any form of
energy it would continue to send the same proportion of
its energy to the U.S., even if Canadians went short
It is safe to say that no other country in the world
has, in time of peace, signed away so completely its
energy resources, present and future.
In 1994, the FTA was expanded to NAFTA to include
Mexico. Mexico refused to sign the energy clauses Canada
Those of us who spoke out against the FTA pointed out
this was not free trade, but forced trade, and warned
the agreement would have profound effects on our future,
our energy security and our sovereignty.
We were accused of being "fearmongers," of being
"anti-trade," of being "protectionist" and so on. Now
even those who hurled those accusations are realizing
they have been standing on quicksand.
The results stare Canadians in the face and hit their
wallets every time they fill their cars, trucks,
industrial or agricultural machines with fuel.
As Canada exports more and more oil and gas -- it has
by-passed Saudi Arabia as the largest supplier to the
U.S. -- some still attempt to justify these agreements.
However, under the FTA, the U.S., now taking 60 % plus
of our production, will, when the shortage comes, have
the right to 60% (or more!) in perpetuity -- Canadians
will have the right to whatever is left.
Oh, but the Alberta tar sands are there, we are
assured. Rarely mentioned is that the petroleum coming
out of the tar sands is going south to the U.S.
virtually royalty free and that large reserves of
increasingly valuable natural gas are being burned to
process this tar sands production. In other words,
Canada is actually subsidizing -- at great financial and
environmental cost -- the giveaway of a precious finite
The NAFTA promise of secure access to the U.S. market
was never anything but an illusion and nothing but
shreds remain of the guarantee of an end to arbitrary
U.S. tariffs. Yet the take over of our industries
continues apace -- from energy to beef, from
manufacturing to retail. It's time to wake up.
We need to set up a coast to coast comprehensive
review of the FTA and NAFTA. This review should examine
in detail the effects of these agreements on our economy
and sovereignty and then make an informed recommendation
about the future.
Integrating our energy and our economy into that of
the U.S. means being subject to U.S. ownership,
decisions, priorities and prices. It means losing the
capacity to direct our future and our own resources in
our national interest.
We don't have to remain tied into agreements that
will see our energy prices driven through the roof, or
watch our economy and control of our destiny move into
Some insist that Canada continue to suffer and crawl,
but it is not necessary. Both the FTA and NAFTA have
withdrawal clauses that enable Canada, with six months
notice, to withdraw without penalty or conditions and
then revert back to trading with the U.S. under existing
multilateral trade rules.
Let's not wait till our industries and agriculture
become completely uncompetitive or until Canadians are
left begging for their own energy at 40░ below zero. As
we watch the catastrophic events unfold in the Gulf of
Mexico it is clear that Canada too has important
decisions to make to safeguard its future.
David Orchard is the author of The Fight for Canada -
Four Centuries of Resistance to American Expansionism,
and ran for the leadership of the federal Progressive
Conservative Party in 1998 and 2003. He farms at Borden,
SK and can be reached at tel (306) 652-7095, e-mail: