Ottawa Citizen, Friday, August 19, 2005 (also published in the Kitchener-Waterloo Record, August 18, 2005; Vancouver Sun and Saskatoon StarPhoenix, August 19, 2005)

The end of NAFTA: Canada signed away its energy and got nothing in return; the U.S. response to a recent lumber ruling shows it's time to get out

by David Orchard

For two decades those of us critical of the Canada-U.S. free-trade agreement (FTA), and its successor NAFTA, have pointed out that these agreements didn't give us free trade, but would cost us a large part of our sovereignty and national well-being.

Today, even promoters of the FTA as a "rules based" nirvana of "secure access" to the U.S. market -- and part of a move toward global "free trade" -- have been forced to face hard realities.

A couple of recent examples deserve examination. Recently, the China National Offshore Oil Corp. (CNOOC) was forced by what it called "unprecedented political opposition" in Washington to withdraw its open-market bid to buy California-based Unocal Corp. Congress saw the deal as a threat to American "energy security." U.S.-based Chevron is now almost certain to pick up Unocal -- for a substantially lower bid than that offered by CNOOC.

Canadians, on the other hand, living in a larger, colder country with a critical dependence on energy, have signed away under the free-trade agreements our energy security and -- even though our industry is far more foreign-controlled than that of the U.S. -- are told repeatedly by the government that we no longer have any need to own or control our oil and gas reserves.

While both other NAFTA countries have national energy policies focused on support for domestic ownership, last fall our finance minister, Ralph Goodale, told us it was time for Canada to get out of the energy business. The government announced the sale of its remaining Petro Canada shares at the bargain-basement price of $64.50 -- a fire sale begun in 1991, when shares now pushing $100 were sold for $13; more followed in 1996 at $20.

This month in British Columbia -- in the biggest foreign takeover since the 2002 purchase by U.S.-based Duke Energy of Westcoast Energy -- Texas-based Kinder Morgan picked up Terasen Inc., the province's largest natural gas distribution company and the biggest private-sector provider of water services in Western Canada. All of Terasen's pipelines, refineries, oil, gas and water operations are included in the deal, essentially stripping B.C. of domestic control of its energy supplies.

At a time of unprecedented energy hunger, as countries around the world scramble to secure energy supplies, and our prices escalate, Canadians are treated to an ongoing mantra about how we should be pleased that foreigners are buying up our energy industry and reserves. Federal Trade Minister Jim Peterson recently expressed satisfaction: "I would not be surprised if people from around the world wanted access to our energy or saw our energy companies as very good investments."

While spending billions and passing sweeping laws supposedly to protect against terrorist threats, real or imagined, our government is doing nothing to maintain domestic control over our rapidly dwindling non-renewable reserves of oil and natural gas, leading to the predictable and very real threat of skyrocketing energy prices to Canadian industry, agriculture and consumers.

While the so-called free-trade agreements handed Canada's ever-more-valuable energy over to U.S. industry through the forced proportional sharing and pricing clauses of the FTA (which Mexico refused to sign), did we get the secure access and rules-based regime that made it all worthwhile?

Maybe ask the lumber industry. After repeated, and ignored, FTA and NAFTA rulings in Canada's favour, where are we? A U.S. tariff has netted $5 billion. The U.S. response to the latest NAFTA panel ordering it to get rid of the tariff and return the $5 billion has been a yawn and a succinct rejection.

In a further mockery of free trade, under U.S. law, money from the tariffs collected by the U.S. is distributed to the companies initiating the challenges against Canada's industries -- an ongoing incentive for U.S. companies to continue targeting Canadian exports and attempting to impose tariffs on them.

When the U.S. speaks of its national security, the Canadian government salutes almost automatically, but who is protecting Canada's national interest?

Chasing the utopian dream of secure access to the U.S. economy has devastated our livestock industry, led to almost total U.S. ownership of our meat packing capacity and to repeated U.S. trade challenges and unprecedented tariffs on our grain and lumber, seen close to 20,000 Canadian companies (including the ownership of entire industries) move into U.S. hands in the last two decades, and left us holding a bag of ashes instead of reaping the rewards of our abundant energy supplies.

It is clear that the U.S. has pulled out of NAFTA. This means our energy resources are once again ours, as is our ability to determine our course in the world. We have everything we need to do so, except political leadership not afraid to give Canadians a direction of which we can all be proud and which will provide real security in times ahead.

David Orchard, author of The Fight for Canada -- Four Centuries of Resistance to American Expansionism, ran for the leadership of the federal Progressive Conservative Party in 1998 and 2003. He can be reached at davidorchard@sasktel.net

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