Friendly Fire Between Neighbours

"On Trade, and in other ways, also, they are among the worst Nations in the World to deal with."

"They feel entitled, and  yet, WE DON'T NEED CANADA, THEY NEED US!" 

"[Canada is one of the most] entitled [countries to deal with in terms of trade]."

"[Canada] wants the benefits of being a State, without being one." 

U.S. President Donald J. Trump

 

"As we drilled down, what we discovered was that what our understanding of what had been agreed to was quite different from what was showing up in the documents. When that kind of happens once or twice, it's kind of understandable, but when it happens consistently, and every interpretation is the most negative interpretation [then it] got to a point [where they walked away]."

"That's just something we could not accept [dispute over tariff of medium and heavy vehicles] because we want to protect the existence of an automotive assembly industry in Canada for cars, light trucks, you know, medium trucks and heavy duty trucks."

"We're disappointed. We worked hard, but at the end of the day, the terms that were put forward on a deadline -- that was created by the United States -- it didn't work for us."

"[The U.S.]  has changed its view of economic partnership [and] in the face of that, Canada, among other things, has said that we will look to diversify. So we have to ensure that any agreement we would come to with the United States does not constrain our ability to create trading relationships, open and free trading relationships with other jurisdictions."

"We're just not willing, at the end of the day, to accept terms that were unfair, uneconomic and actually, you know, called into question the reliability of the deal."

"Because you know one of the things that you'd hate to see happen is you agree on something and then, after agreeing to it, it gets undermined."

Mark Wiseman, Canadian ambassador to the United States 

President Trump's notional 'next up'

 

A range of issues contributed to the collapse of the trade talks between the U.S. and Canada. The written text of a potential deal failed to match what the Canadian side believed it had agreed to. Following the collapsed talks when the Canadian delegation walked away from a deal both sides felt would finally be the solution to the awkward, prolonged trade talks between the two neighbours, political and security allies and for the most part, longstanding friendly relationships, the U.S. took steps to apply a punishing 50 percent tariff on some $20 billion in Canadian goods.

 

Canada was faced with little option but to respond in kind, a retaliation that the U.S. warned would cost Canada even more once Canada's move takes effect on September 8. Further escalation of U.S. tariffs is now a certainty, although it remains unclear whether there will be a resumption of negotiations between    the present and the September 8 date. 

 

There was a dispute over tariff treatment of medium and heavy vehicles with the U.S. resisting cutting tariffs, despite Canadian negotiators explaining that they are produced by both General Motors Co. and Ford Motor Co., automakers with operations in Canada. That balking on reduced tariffs for those vehicles fits right into President Trump's oft-repeated urging for American manufacturing integrated with Canadian counterparts in shared production, be put to a stop, for U.S. companies to withdraw their Canadian presence and return to full manufacturing in the United States.

 

Richmond Plywood Corporation in Richmond, B.C., says it has paused its U.S. sales because importers won't pay the 50 per cent tariffs and the company can't absorb the cost. (Bhavjit Thandi)

 

Another contentious issue for Canada is the heavy tariffs on Canadian steel exports aluminum  and lumber. President Trump is fond of repeating that Canada has nothing that the U.S. needs or wants, but the United States has everything that Canada desires. Canadian electrical energy, oil and liquid natural gas exported to the United States is critical to American energy needs. Without Canadian steel and aluminum and lumber the costs of domestic architecture in the U.S. will deal a blow to U.S. consumers in higher construction costs for houses.

 

U.S. trade negotiators introduced another unexpected item when the demand was made that Canada pedal back on its search for alternative trade and export routes to other countries. Separate trade agreements with other nations to swerve away from total dependence of exporting Canadian goods and services to the United States did not sit well with the Trump administration. Other U.S. trade irritants are issues such as American spirits that are currently black-listed from entry to Canada in a retaliatory move against unfair trade practices that include new and growing tariff inclusions on goods meant to be protected under the Canada-U.S.-Mexico agreement (CUSMA).

 

The federal government is laying out its plan to hit the U.S. with dollar-for-dollar counter-tariffs that will impact around 700 different American products.  CTV

 

New issues brought to the negotiating table such as bilingual French-English signage on U.S. exports to Canada have surprisingly cropped up, when for as long as trade has existed between the two countries the two official language requirements for export to Canada have been routine. "It is non-negotiable, in terms of our ability to protect - and to not just protect, but to be able to enhance and grow the French language in Canada, in Quebec and in the rest of Canada. Those that want to do business in Canada, be it digital or anything else, must respect that fundamental reality", observed Ambassador Wiseman. 

 

President Trump's constant goading of Canada, referring to the nation as the 51st State, calling its prime ministers 'governors', his AI-assisted videos with the U.S. flag superimposed over the northern half of North America, his complaints that Canadians for some unknown reason don't care for his style, have not endeared him to the Canadian public. As a result of the new U.S. tariffs imposed on Canada, 87,000 Canadian jobs have been placed at risk and the Canadian unemployment rate bloat to 6.8.

 

Canada is prepared to respond with counter tariffs on U.S. steel, dairy, appliances, electronics and other products. Canada's economy will be hurt, and it won't take very much longer before the American economy too will feel the pain. Canada exported $454 billion in goods and services to the U.S. last year, much of it in energy, while importing $426 billion, according to U.S. Commerce Department data. 

 

"We're going to need a suite of programs, probably not unlike we did through the COVID era, to support working people and the industries that they depend on", observed Lana Payne, national president of Unifor, representing workers in the automotive as well as other sectors in Canada. 

 

"The last thing we need right now, as our economy is getting back on its feet, is a trade war with Canada". opined former Trump earlier administration vice-president Mike Pence. 

 

Ottawa announced new support support for workers and businesses facing U.S. tariffs. CTV

 

Permanent Joint Board on Defence Pause

"The scope of the Permanent Joint Board on Defence's [PJBD] work also encompasses policy, operations, financial, logistics and other aspects of Canada-U.S. defence relations."

"Bilateral defence recommendations are forwarded to respective Heads of Government or appropriate officials for consideration."

Permanent Joint Board on Defence 

The Pentagon has announced it has paused its participation in a joint Canada-U.S. defence board that's been around since the 1940s, accusing Canada of not making enough progress on its commitments. Canada says it's always ready for constructive discussion on how to strengthen mutual security. CBC

 

"[The PJBD] was created at a time when the future of Britain's place in the world was uncertain, and from the real recognition and realization by both [President Franklin D.] Roosevelt and [Prime Minister William Lyon Mackenzie] King that the Canadians and Americans needed to work together and formalize their relationship."

"Throughout the war [Second World War] this was a really important body for co-ordinating all sorts of aspects of wartime production, but especially defence issues, and why this maters so much for Canada is that it provided a formal body through which American requests needed to be made and then to be taken from the Canadian representatives on that board back to the government in Ottawa."

Prof.Timothy Sayle, Munk School of Global Affairs and Public Policy, University of Toronto 

 

"Canada and the U.S. have a long history of robust cooperation and collaboration on continental defence."

"Canada will work with trusted partners who are ready to work with us, always remaining ready to come to the table for constructive discussions about the best ways to strengthen mutual defence and security."

Canadian Defence Minister David McGuinty 

 

 

It came as a surprise, a shocking surprise, a wake-up call when the United States declared its intention to 'pause' the U.S.-Canada Permanent Joint Board on Defence "to reassess how this forum benefits shared North American defence". As the senior advisory body on continental defence the PJBD is a formalized historical mutual assurance pact signed by both countries that each must be fully involved in continental defence in lock-step with one another.

 

Set up to meet twice annually, meeting locations alternating between both countries, co-chaired by a Canadian and an American civilian, with both military and civilian representatives of the U.S. Defense and State Departments, Canada's Department of National Defence and the Department of Foreign Affairs and International Trade among others, this pact has represented the importance of military cooperation in a shared trust by neighbours in defence of their shared geography. 

 

Established in 1940, the PJBD came out of the Ogdensburg Agreement during the Second World War. Elbridge Colby, as the undersecretary of American defence for policy stated that: "A strong Canada that prioritizes hard power over rhetoric benefits us all. Unfortunately, Canada has failed to make credible progress on its defense commitments. We can no longer avoid the gaps between rhetoric and reality. Real powers must sustain our rhetoric with shared defense and security responsibilities."

 

There is little question but that this decision is linked to the Davos speech by Prime Minister Mark Carney months ago when he spoke of the place of 'middle powers' in the world, claiming that "If we're not at the table, we're on the menu". The import of which was an obvious critique of the Trump administration's incendiary decision-making and musings which have roiled world markets and left traditional U.S. allies confused over the seeming irrationality of many of Mr. Trump's declarations. Tariffs and the war in Ukraine have left a decidedly unfavourable impression in the minds of global leaders.  

"[There were two aspects to the board's annual or semi-annual discussions: firstly did the two sides view the world the same way, and if they didn't what was to be done]. That was mostly congenial and there was not that much asked of us."

"[Secondly, there was a] to-do [list of North American issues, centred around the North American Aerospace Defence Command [NORAD]."

"We were always doing a tap-dance around two percent [NATO's two percent of GDP defence spending benchmark]. But on a military-to-military basis, we still got a lot done."

"They realized they couldn't defend the Arctic without involving Canada." 

"The military rupture is just following the political rupture."

"NORAD will be next on the chopping block. And there is no question that will undermine Canada's security. It's dangerous politics."

Former Liberal MP John McKay, Canadian chair of the PJBD, 2016-2024 

Immediately following the end of World War II, the PJBD served as a strategic-level board tasked with ongoing considerations of land, sea, and air space security. Personnel and defence materiel relating to the northern half of the Western Hemisphere was its focal point, including the Distant Early Warning Line, the North American Air Defence command (Aerospace) in 1958, the underwater acoustic surveillance system and the North American Air Defence Modernization program (NORAD) in 1985. 

 

Co-chaired by MP John McKay and the U.S.'s Rebecca Zimmerman, Acting Assistant Secretary of Defense for Homeland Defense and Hemispheric Affairs, the November 2024 242nd PJBD meeting in Ottawa discussed topics such as NORAD modernization implementation, Arctic security, climate change, defence, co-operation in the Indo-Pacific, Latin America and the Caribbean along with critical minerals. There followed an 18-month gap with no meetings, coinciding with President Donald Trump's second presidential term.  

 

U.S. Undersecretary of War for Policy Elbridge Colby waits for the start of a meeting at NATO headquarters in Brussels on Feb. 12. Colby announced Monday that the Pentagon is 'pausing' participation in the Permanent Joint Board on Defence, an advisory body on North American continental defence that was established in 1940. (Geert Vanden Wijngaert/The Associated Press)

 

"The person who made the statement here is not Donald Trump, not somebody just shooting off the handle, not someone who is uninformed."

"this is a person who is not only highly educated but also has focused on the details of defence spending."

"What Eldridge Colby [is] saying is: 'This is a reality check, Canada. You have a prime minister who travels all over the world, makes these grand promises, but promises are not policy."

"Promises are not impressing Russia, they're not impressing China."

"Canada's not bringing enough to the table, not just in order to satisfy the United States, we are not bringing enough to the table in terms of our defence capacity."

Aurel Braun, professor of international relations and political science, University of Toronto 

 

"Drill, Baby, Drill!"

 

"We were running out of Tier 1 inventory; everybody's running out of Tier 1 inventory."

"The best inventory is going to be run out of Pioneer by 2028, Tier 2 by '32, so people don't talk about the fact that we're running out of inventory."

Scott Sheffield, founder, former U.S. Permian fracking giant Pioneer Natural Resources Co.

 

"It's a very touchy topic down here, that the [U.S.] Permian [Basin] is this infinite resource that will always keep going."

"But the Permian is no longer in its first inning."

"[U.S.] oil and gas companies have some pretty deep pockets and they should be turning back to Canada, given that they don't have unlimited running room here."

"We're growing like mad in the Montney [Alberta oilsands]. The major natural gas plays in the U.S. are actually declining versus the Montney [shale] that is actually growing."

Mike Verney, executive vice-president, McDaniel & Associates Consultants Ltd.

 

"We're Texas-sized as far as gas goes; we've got some big numbers."

"Long term, we are the best place to invest in the world because as other resources dry up, Alberta is not going anywhere for a long time."

Alberta Energy Minister Brian Jean 

It would cost hundreds of millions of dollars to retool U.S. refineries to handle domestically produced oil. But stopping U.S. exports would also leave Canadian crude with few market options. (Todd Korol/Reuters)

 

U.S. President Donald Trump is on public record, sneering that Canada hasn't got anything that his country needs, including energy resources, of which America has more than sufficient for its needs and more. This, as part of his explosive trade war, which began with Canada and Mexico when he first threatened, then imposed across-the-board tariffs on all goods entering the United States from Canada and Mexico, then extended his tariff war to China, before finally lassoing the European Union, then South Korea and Japan.

 

So  how's the United States doing in providing energy resources for itself beyond the present time? American energy executives at the CERAWeek by S&P Global conference in Houston are now agreeing there has been a slowdown in oil production in 2025, anticipating a potential peak in U.S. oil production just around the corner of the near future. This, despite his calls to "drill, baby, drill".  

These types of dismal prognostics seem misplaced  at the conference where peak oil predictions are fairly unpopular, given its close proximity to the most prolific oilfield in the United States, the Permian Basin -- a region spanning parts of West Texas and southwestern New Mexico -- region that is recognized as the primary driver of U.S. oil and gas production growth latterly.

 

American oil refiners are largely equipped to handle heavier crude imported from other countries such as Canada. (Bing Guan/Reuters)

Permian output saw a record 6.3 million barrels daily in 2024, accounting for some half of the U.S. total production in the last year, at the same time that other shale oil plays plateaued or declined, according to the U.S. Energy Information Administration (EIA). That preceded symptoms the Permian may be entering its declining production years with well-productivity issues being experienced by producers alongside diminishing production growth.

 

This week, the founder of former Permian fracking giant Pioneer Natural Resources Co. said that one of the main reasons his company sold out to Exxon Mobile Corp. in 2023 was the very issue made clear -- that it was running out of top-tier drilling inventory. 

 

Despite tremendous domestic reserves there is uncertainty about the U.S. capacity to feed a booming liquefied natural gas (LNG) sector while tending to growing domestic demands for natural gas-fired electricity generation driven by energy-voracious data centres, due in part to a shortage of pipeline capacity.

 

There are persistent doubts whether President Trump's willingness to make use of emergency powers in expediting, permitting and fast-tracking project reviews, to the delight of the U.S. oil and gas industry, will translate to a significant production increase required to meet the demand of an LNG export sector expected to double in size by 2028.

 

The issues of geological degradation and capital discipline among producers have served to alter the American oil and gas sector, and operators no longer leap with the same alacrity to drill new wells, even when oil prices are relatively high. American companies and investors searching out more accessible resources and economic opportunities are beckoned a couple of thousand kilometres north to the vast Alberta oilsands and Canada's Montney shale play.

 

Compared to a previous Alberta provincial estimate of 24 TCF, new data reveal that Alberta has proven natural gas reserves of 130 trillion cubic feet (TCF). The overall figure comes to 144 TCF when probable gas reserves are added, according to a study commissioned by the Alberta Energy Regulator, conducted by McDaniel & Associates Consultants. That new estimate of gas reserves over-doubles Canada's overall total, placing Canada into the global top 10 with the ninth-most reserves, up from 15th, previously. 

 

As well, new preliminary estimates confirm that proven oil reserves in Alberta reached 167 billion barrels, an increase from the last official estimate of 159 billion; final numbers in coming weeks expected after an audit has been completed for all basins. Texas' proven reserves in 2023 by comparison, were 20 billion barrels, according to EIA estimates. 

Pumpjacks draw out oil and gas from well heads near Calgary, Alta. Photo by Jeff McIntosh/The Canadian Press via AP files

MR. PRESIDENT: This Does Not Compute : Violation of CUSMA

"Today's reckless decision by the U.S. administration is forcing Canada and the U.S. toward recessions, job losses and economic disaster."

"The U.S. government's self-defeating tariff policy disregards decades of success and trillions in trade to try and revive a failed economic model from the 1800s."

"Tariffs are a tax on the American people."

Candace Laing, president, CEO, Canadian Chamber of Commerce 

Ms.Laing is not alone in her dismissal of the functionality of tariffs and her prognostication for the future. Her American counterpart, the U.S. Chamber of Commerce, has urged a swift end to the tariffs,  under the argument that "tariffs will only raise prices and increase the  economic pain being felt by everyday Americans across the country". Brian Cornell, CEO of retail giant Target voiced his opinion as well: "the consumer will likely see price increases over the next couple of days". These are not happy days.

"All goods exporting sectors, save agriculture and metals and minerals, rely on U.S. goods markets for between74 percent and 100 percent of overall exports.

"Energy [crude oil, natural gas and coal] is responsible for 29 percent of Canada's goods exports to the U.S. in 2024 [Jan-Nov.]."

"Machinery and equipment manufacturing, which includes automotive/parts, was responsible for 21 percent of goods exports in the same year."

Scotiabank 2025 report

President Donald Trump addresses a joint session of Congress at the US Capitol on Tuesday.

Win McNamee/Pool/AP

 

"This is not a trade war, this is a drug war. Hopefully they [Canada] understand that", stated U.S. Commerce Secretary Howard Lutnick. U.S. Customs and Border Protection data record merely a small volume of fentanyl crosses into the United States from Canada illegally. Just 13.6 grams of fentanyl was seized by northern Border Patrol staff in January.

 

According to Mr. Lutnick, President Trump launched a study on tariffs to conclude on April 2nd. The president, said Mr. Lutnick, wants to see "material reduction" in opioid deaths. Actually, so does Canada, since it has been second to the United States in the unprecedented number of overdose deaths caused by fentanyl. Canada has also suffered quite an uptick in gang violence and murders where the guns seized have been traced to the United States. Canada would appreciate U.S. border agents policing the black market of illegal shipments of weapons to Canada. Just a thought.

 

 Canada has, of course, implemented its own across-the-board tariffs on American goods imported into Canada, to more or less match the 25% tariffs that President Trump has ordered for Canada. "Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount!", came the warning. Implying that there will be no end to the punishing tariff war between two erstwhile friendly, cooperative and mutually appreciative neighbours.

 

Ontario is pulling 3,600 U.S. products off LCBO shelves in response to Trump's tariffs, with Premier Doug Ford encouraging people to buy Canadian brands instead.   CBC

"Maine and Canada's economy are integrated", pointed out Senator Susan Collins, Republican from Maine who admits to being "very concerned" about the tariffs for their affect on her state, with its proximity to Canada. Evidently all this could be avoided if Canada was more obliging about President Trump's invitation to set aside its sovereignty and accept the benefits that would accrue if the country called Canada simply agreed to meld itself within the loving embrace of the United States, as its 51st state.

 

Trade between the United States and Canada has become tightly integrated, particularly in the auto sector. Parts go back and forth between Canada, the U.S. and Mexico. Mr. Trump is exerting pressure on General Motors, Ford and Stellantis to wrap up their branch manufacturing in Canada and  Mexico, to shift production in its entirety back to the United States. A massive undertaking that cannot be done overnight. It would take years to disentangle the three countries from their current shared production enterprise.

 

According to Statistics Canada, the U.S. receives 75.9 percent of Canada's total exports, where about $800 billion worth of goods crossed the border in the first three quarters of 2024. Canada is seriously reliant on U.S. markets for its goods; the tariff burden will have grossly deleterious impacts on Canadian production and employment. The United States will have a share of those impacts within its borders, but at a much lower magnitude.

 

U.S. President Donald Trump was asked by reporters at the White House on Thursday about the stock market's reaction to his tariff plans. Trump responded he is 'not even looking at the market.'  CBC

 

In US. dollars, according to Trading Economics based on the UN COMTRADE database on international trade, these are the top ten exports from Canada into the United States:  

• Mineral fuels, oils, distillation products: $131 billion;
• Vehicles other than railway, tramway: $50.76 billion;
• Machinery, nuclear reactors, boilers: $30.31 billion;
• Commodities not specified according to kind: $19.30 billion;
• Plastics: $14.18 billion;
• Wood and articles of wood, wood charcoal: $11.59 billion
• Electrical, electronic equipment: $11.24 billion;
• Aircraft, spacecraft: $9.25 billion;
• Pearls, precious stones, metals, coins: $9.11 billion

In 2023, bread, pastries and other baked goods, along with beef, pork and other meat, and gold had been included in the top 10 list, according to information from the Census Bureau. 

President Trump appears adamant that the flow of fentanyl and illegal migrants over the U.S. borders with Mexico and Canada have inspired him to enact these burdensome tariffs, urging that both countries increase security at border crossings. On Canada's part, officials argue that less than one percent of fentanyl that enters the United States flows over the border from Canada. Both Mexico and Canada hastened to commit to toughening up their borders, assuring the president that they will do all that is in their power to halt those entries. 

In the matter of illegal migrants attempting to enter the United States through Canada, perhaps it might be useful to recall that the entry of thousands of illegal migrants into Canada have arrived via the United States. Now, thanks to the tariffs a 25% increase can be anticipated by Canadian consumers for chicken, ducks, geese, turkeys and guinea fowls. Milk, cream, yogurt, cheese and other dairy products will also be hit. As will fruits and vegetables; tomatoes, legumes, citrus, melons, peaches and apricots. Then there are spices and seeds, grains like rye, wheat, barley, oats and rice. Also bottled water, including mineral and flavoured.

"What we had here is one of the most enviable integrated trade systems that has provided incredible prosperity, wealth and resilience to North America."

"It's a foolish move to undermine that because it takes a minute to destroy and it will take decades to rebuild the trust [that Americans have blown up with their allies]."

Alan Kessel, Canadian diplomat

People protest outside of the US consulate in Vancouver, British Columbia, on Tuesday.

Ethan Cairns/The Canadian Press/AP

What a Tangled Web We Weave

"We are in a uniquely complicated spot."

"Were being borne along a current with very few options. So the idea that we can craft a way forward easily is wrong."

"They don't see it in Chinese thinking as an oppressive thing, they just see themselves in more benign terms as the leading civilization in the world, and that they ought to have an important say in the affairs of the world, and even a dominant position."

"But it's not a Nazi-like military conquest of the world."

Gordon Houlden, director, China Institute, University of Alberta 

"It's been said that China doesn't have allies, it has markets."

"I attribute the Cold War spirit and the Cold War stresses in largest part to China's actions, as well as the tone of their 'wolf warrior diplomacy', which isn't very diplomatic."

Margaret McCuaig-Johnston, senior fellow, former member, Canada-China Joint committee on Science and Technology

"It will require much more thought, it will require much more management of foreign policy. That will be difficult for everybody It'll be particularly difficult for Canada because we haven't put much thought into our foreign policy for a long time, and we're going to pay a price in terms of the learning curve that we have to go up."

"That's the first step, [former Canadian Parliamentarians and diplomats  urging Canada to release Huawei CFO Meng Wanzhou in exchange for Canadian detainees Michael Kovrig and Michael Spavor; gross capitulation to a belligerent China] when I talked about China's assault on our sovereignty and our autonomy. It's sapping the will, it causes countries to feel that it's just impossible, it's too much work."

"And that was never Canada's approach in the past, but I worry that we've succumbed to that to a certain extent."

David Mulroney, former Canadian ambassador to China, 2009-2012

Illustration, Craig Stephens

 

In the United States a sweeping bill was tabled to lay the groundwork for America's strategy to oppose China's global rise. The Innovation and Competition Act, notes strategic industries such as quantum computing, advanced semiconductors and pharmaceuticals, highlighted in a recommendation that the U.S. increase public support through commitments to deeper protection for critical materials, the expansion of research spending, and strengthening of cyber defence capabilities. 

The legislation includes Canada, where American officials schedule a role in their China policy for Canada, plans that are deeply consequential in the rough sketch they portray of Canadian foreign policy unfolding in the coming decades as U.S. officials gear up to a protracted conflict with China for global supremacy: the new Cold War. It is a war being fought in stages on countless fronts including cyber warfare, military expansionism, technological research, culture, infrastructure, and intellectual property.

Canada has been inexorably drawn into the long struggle between the two giants and it is clear that Canada's involvement will continue as competition gathers momentum in reflection of Canada's close ties to its neighbour. Ottawa will be forced to navigate a growing divide between China and the U.S., mandating policy choices encompassing everything from trade to national security.  But the truth is, it is not only America's struggle that has invested Canada with the need to protect itself from China's grasping feelers intending to raid other nations' intellectual property.

In 2020 Canada signed an agreement with the U.S. that would establish new supply chains for critical minerals and rare earths in an effort to respond to China's market dominance in those areas. Even so, the Canadian government remains stalled over a decision whether it will green-light China's telecommunications giant Huawei with a role in building Canada's next-generation 5G mobile network, despite other members of the Five Eyes intelligence network having ruled Huawei Technologies out of theirs, for security reasons.

 

The American legislation speaks of a "shared vision of democracy" to maintain the "rules-based international order established after WW11". Stronger ties between Western allies are meant to be accelerated and firmed up; the loosening of export regimes protecting "critical defence-related technology" between the U.S. and Canada, "establishing open and transparent planning with Canada on infrastructure, cooperating on Arctic defence and energy connectivity, combating industrial espionage", and deepening intelligence sharing "particularly in 5G telecommunications technology". 

This, in response to an increasingly bellicose and authoritarian Xi Jinping whose plans to guide China to occupy the position currently held by the United States as the world's greatest power, succeeded in creating an American bipartisan agreement no other issue has moved Congress to set aside political differences between Republicans and Democrats. The declining prestige of the U.S. resulting from two successive administrations' confusing signals to their traditional allies has signalled to President Xi that an opportunity is opening for the Chinese Communist Party.

President Xi points with pride to Beijing's "socialism with Chinese characteristics"; a commitment to communist ideology, yet stripped of Marxist elements to favour capitalist-oriented policies that have succeeded in establishing China's authority as the world's greatest manufacturing and trade colossus. China has miraculously risen as an economic arbiter, with President Xi downplaying its none-too-subtle export of political ideology and cultural highlights. 

 

In expansion and exploitation of client countries with its Belt and Road initiative in rapid expansion of road, rail, sea and telecommunication links with Europe, Asia and Africa; Beijing's modern version of its fabled Silk Road enterprise of yore is advancing China's interests. China, shielded by its membership in the World Trade Organization has adroitly managed to undermine multilateral institutions, in the process awarding itself the rewards of more liberalized trade. 

In the process, giving ample examples of why it should not be trusted. President Xi promised that China had no intention of militarizing the artificial islands Beijing built in the disputed South China Sea, and then proceeded to do precisely that. Assuring it had no intention of spying on foreign companies, Beijing continues to indulge in systematic industrial espionage campaigns, surgically purloining intellectual property. China's Ministry of State Security was officially linked to the hack of Microsoft email software where 400,000 servers globally had been infiltrated

The distortion of multilateral institutions through gaining positions of power within groups dictating international settlements or which set diplomatic and industrial guidelines has been achieved by deliberate design. At least 40 UN institutions focused on engineering, maritime law, health, finance, atomic energy and a range of other areas sees Chinese nationals occupying leadership positions. Including placements at the International Telecommunications Union, Industrial Development Organization, and Food and Agriculture Association, for leverage in international systems of trade and oversight.

Incredibly, despite all the problems that Canada has experienced with China, from cyber espionage, to intelligence robbery, and gravest of all the arrest, incarceration and sentencing of Canadian citizens for purported crimes, by a vengeful China, trade ties between the two countries continue to flourish. Canadian exports to China increased eight percent to $25 billion, not quite a match for the 75 percent of Canadian exports that enter the United States but still conferring on China the position of Canada's 2nd largest trading partner.

Former Ambassador Mulroney recommends separating Canada from China in the areas of sensitive national security -- such as artificial intelligence research or critical minerals, and continuing to partner in other areas such as agriculture and climate change. That would, of course, depend largely on how much China values agriculture trade as opposed to opportunities to continue its thievery of technological research and intelligence.

Canada, Pushing Back at Trump PPE Restrictions

"New Brunswick Power is the electricity provider to Northern Maine."

"There are at least three hospitals in Northern Maine that would get their electricity through New Brunswick Power."

Kirsten Hillman, Canadian Ambassador to Washington, D.C.

In April 2020, American firm 3M was ordered by President Donald Trump to stop sending N95 masks such as this one to Canada, but refused to comply. Photo by Angus Mordant/Bloomberg

Early in Canada's introduction to the pandemic the issue of personal protection equipment became a leading dilemma; Canada hadn't any to speak of. In a fit of generosity and compassion, the government of Canada had seen fit when China was in its early desperation stages of managing an 'epidemic' of SARS-CoV-2 -- when the rest of the world found difficulty imagining that the virus causing COVID-19 would speedily gravitate abroad -- to gratuitously send along Canada's supply of said PPEs.

 

And then Canada discovered it would need them, after all. It might even had made use of the PPE that had been warehoused past its use-before date which it decided to destroy just before Canada itself become embroiled in the predatory virus stalking through its population and panicking its hospitals traumatized over the notion it would never be able to cope with growing numbers of seriously ill people requiring ventilators, many of whom would soon be beyond medical help.

 

Mind, China returned the compliment; when Canada pleaded with Beijing to supply the country with PPE as the world's largest manufacturer of them, it sent along masks and other equipment leading to a big sigh of relief in Canada -- until it was discovered that the deliveries were next to useless; their specifications not up to par, and not worth the effort nor what it cost to access them.

 

Photograph: Nicholas Pfosi/Reuters

And then there was the trifling issue of Canada's relations with its 'best-friend' neighbour when then-President Donald Trump announced his 'America first' sentiments. And the Trump administration restricted shipments of N95 masks and ventilators early spring of 2020, when Canada was desperate for them. Even 3M protested against Mr.Trump's declared strategy of withholding and refusal to permit its masks to be shipped to Canada.

The result led to Canadian officials responding by politely pointing out there were some hospitals in the U.S. that were dependent on Canadian electricity, on Canadian medical personnel working in U.S. hospitals. Canada's U.S. ambassador produced a list of levers at Canada's disposal that could be extremely persuasive; medical equipment suppliers in Canada, the electrical supply for northern Maine among them.

Other Canadian officials met with their U.S. counterparts emphasizing that Canada had the potential should push come to shove, to cause problems for the United States, pointing out the items contained on the list of Canada's contribution to America's well-being. Including special filters for bio-containment suits from 3M produced in Canada; a requirement for the suits to be effective; a paper mill in Nanaimo, B.C. producing specialized fabric for surgical masks and gowns.

It took quite a bit of prodding to convince the Trump administration of the interoperability and interconnectedness of the two neighbours' economies; that neither country gained even a modicum of advantage from export restrictions. It seemed to work, since Mr. Trump relented, setting aside his trumped-up defence production act in prevention of critically needed items leaving the U.S. The resumption of the 3M shipments an adequate assurance of the message having had the requisite impact.

 

A CargoJet flight bearing tens of thousands of pounds of personal protective equipment landed in Hamilton, Ont., earlier this month as part of a made-for-Canada plan to deliver to medical supplies from China to front line workers across the country. Two cargo planes sent to China for pandemic supplies returned home empty Monday. (CargoJet/Twitter)

 

"As previously mentioned, there is a 40 entering the country, meaning aircrews cannot stay at the airport for an extended period of time to wait for supplies to be unloaded onto planes", explained an email between the prime minister's office staffers on the occasion when a Canadian flight had no option but to leave the Shanghai airport absent its order of masks, when Beijing too found reason to retain PPE internally rather than release the products through legitimizing exports.

A German company, Zoll, producing ventilators in the U.S. signed a contract with Canada early in March for the provision of 200 ventilators to arrive in early April. The ventilators were delayed as a result of the company having a supply relationship with the U.S. department of defense, and President Trump had used the defence production act to halt shipments abroad of medical devices.

"Zoll indicated that all its ventilator production will go to the U.S. [DOD/Department of Defense] for at least the next 60 -90 days", the then-Foreign Affairs Minister informed staff at the prime minister's office. An appeal by Canada's health minister to her U.S. counterpart exacted a promise to exempt Canada from the act, and though the shipment was delayed by a month, it was eventually received.

Obama Redux : Hostility to Canadian Oilsands

"[Mr. President, I urge you to reconsider the cancellation of Keystone XL and] take into account the potential impacts of any further action to safety, jobs and energy security."

"It is of the utmost importance that the United States maintain energy security through strategic relationships with our allies rather than increasing reliance on OPEC nations and Russia. This includes the development of infrastructure like the Keystone XL and Mountain Valley pipelines, to get this energy to market in the safest and most responsible way."

U.S.Senator Joe Manchin, Democrat, West Virginia, Chairman, Senate Energy and Natural Resources Committee

The Narwhal

"Your decision will result in devastating damage to many of our states and local communities. Even those states outside the path of the Keystone XL pipeline -- indeed all Americans -- will suffer serious detrimental consequences."

"Please be aware that states are reviewing available legal options to protect our residents and sovereign interests."

"In the meantime, we urge you to reconsider your decision to impose crippling economic injuries on states, communities, families and workers across the country."

Montana Attorney General Austin Knudsen/Attorneys General of 13 other states 

 

"In a nod to the far-left environmental wing of the Democrat Party, the President issued a new moratorium on oil and gas leasing on Federal lands and called a halt to the Keystone XL Pipeline, even though we are a long way from significantly

 

reducing or eliminating our need for oil and natural gas."

U.S.Senator John Thune, South Dakota 

"Keystone XL was not just a policy decision to allow a pipeline to cross a border. What came with it were a whole bunch of permits."

"The policy change had the effect of revoking those permits without due process."

Scott Miller, senior adviser, Center for Strategic and International Studies, Washington

 

As Presidential Candidate Biden, no secret was made of the fact that in deference to those members of the Democratic Party and their environmental lobbyist supporters, much less his loyalty to the Obama years when the same interests held influence over the administration, the XL Pipeline carrying crude oil from Alberta to the U.S. that had been approved by President Donald Trump, would be cancelled at the earliest possible opportunity by presidential decree. That opportunity arrived the day following Mr. Biden's inauguration as President of the United States of America.

Oil dredged from Alberta's oilsands despite having undergone technologically advanced extraction methods to ensure minimal environmental contamination including CO2 emissions has always been characterized by U.S. environmental groups as injurious to the globe, hastening climate change. No such concentrated campaigns were undertaken on American soil by contrast, where 2.6 million miles of pipeline ferry natural gas and liquid petroleum products to refineries to service America's huge appetite for energy.

U.S. environmental groups were far less disturbed about coal-fired plants using old technologies and dirty coal that polluted the atmosphere far more extensively and harmfully than oil extraction in Alberta. Canadian oil was the bogeyman, symbolic of all that was wrong in the oilfields, whereas fracking with its great unknowns relating to forcing chemicals deep underground to pollute groundwater and the process leading to local earth tremors seemed by comparison to the environmentalists, quite benign.

 

Pipeline under construction in Alberta, Canada     rblood/Flickr

 

It is now not only Canada that is being short-changed by this stoppage of the KXL pipeline, but over a dozen U.S. states that are considering legal action against their federal government, voicing their concern that Americans "will suffer serious detrimental consequences" in job losses and energy insufficiency, as a result of that ill-considered move. President Biden's executive order revoking cross-border permits for the $14.4-billion KXL pipeline has union leaders, Republicans and Democratic lawmakers and state attorney generals attempting to persuade Mr. Biden to reverse that order.

Regulatory and legal hurdles were all overcome within the United States of the TC Energy Corp. pipeline project over the past decade. Alberta oil carried directly via pipeline to the U.S. Gulf Coast made good sense a decade ago and continues to make good sense now. The oil, irrespective of the presence of the pipeline, will still be sent, but by riskier-to-the-environment means; shipping and by rail, both methods vulnerable to accidents and costly clean-ups. The safer option of pipelines is vastly more economic, faster and obviously preferential for all those reasons.

 

Rocky Kistner/NRDC

 

Massive investments had already been made; construction was underway in Alberta, Saskatchewan, Montana and South Dakota well prior to Mr. Biden's executive order killing the project. Alberta Premier Jason Kenney's government is reviewing its options; whether to sue the U.S. government over the cancellation. "We are monitoring and continuing to talk to American political players about the importance of Canadian energy tot he United States", said  the spokesperson for the province's energy minister. The province is "reviewing every legal tool at our disposal to defend our financial interests in this project".

Meanwhile shipment by rail is increasing. "Canadian oilsands is in demand in the US. And because of that, it's economic for companies to be taking on [extra] rail shipments, in addition to shipping through [existing] pipe[lines]", said Ben Brunnen, vice-president of the Canadian Association of Petroleum Producers. "Western Canada still has the ability to overproduce its pipeline capacity ... It is reasonable to expect we will see a rise in crude by rail."

The U.S. oil industry wants Canadian crude shipped to its refineries. The alternative is oil shipped from Saudi Arabia, Russia, even Venezuela. Sending oil by pipeline is faster, safer, and would mean that Canadian shippers would be paid the full, not the current discounted price for their oil that comes with shipping by rail. The existing pipelines are fully used with no more capacity. The result is more rail shipments which are costlier and result in discounted prices for Canada; benefiting the U.S. and penalizing Canada.

The Biden administration’s cancellation of the Keystone XL pipeline was largely expected on both sides of the border, especially given former President Barack Obama previously rejected the project in 2015. Photo: Government of Alberta / Flickr

A Gut-Punch in Genial Partnership -- Canada-U.S. Relations

"Well, that was fast. On day one, the new U.S.president, Joe Biden, is reportedly willing to gut-punch his northern neighbour by cancelling a presidential permit for the construction of Keystone XL. It is an insult. Full stop."

"Mineral fuels are Canada's largest export to the U.S. -- at over $89 billion in 2019 -- two-thirds more important than auto vehicles and parts. Almost 3,000 direct jobs and another 14,000 indirect jobs will be lost in Canada with the cancellation of Keystone XL."

"Because of reduced pipeline capacity, Canadian heavy oil will often sell at a discount, resulting in billions of dollars in lost GDP and federal and provincial tax revenues."

"It will be a no-win decision for the United States as well, if Biden goes ahead. The discrimination against Canadian oilsands production will lead to a loss of 42,000 direct and indirect jobs even as the pandemic recession rages on. When no longer piped, oil will travel by rail, which is less safe and environmentally more harmful. For every barrel of imported Canadian oil lost, the U.S will import more heavy oil from other countries."

"Who are the competing oil suppliers to the United States? In 2019, they included Mexico, Saudi Arabia, Iraq and Colombia. These producers, as well as others, including Russia and Venezuela, will be important beneficiaries from President Biden's decision to cancel Keystone XL."

Dr. Jack M. Mintz, President’s Fellow of the School of Public Policy, University of Calgary 

Construction on the Keystone XL pipeline project in Oklahoma, in 2013. Photo by Daniel Acker/Bloomberg files

"[It is] incredibly troubling [that TC Energy has suspended work on Keystone XL]."

"Now is the time for our nations to strengthen our trading relationship, not erect further barriers to collaborative and sustainable development."

Saskatchewan Premier Scott Moe

 

"[We are disappointed that Biden is] putting politics before reason [in his anticipated decision to rescind the pipeline permit]."

“Pulling the plug on a major project, hours after taking office, is a rocky starting point for re-setting Canada/U.S. relations."

PCAC president Paul de Jong, The Progressive Contractors Association of Canada .

U.S. President Joe Biden has cancelled the Keystone XL pipeline permit on his first day in office,  CBC News. (Kyle Bakx/CBC)

During the Obama presidency with Joe Biden as second-in-command, the environmental champions oversaw energy production spewing the dread carbon dioxide into the environment from coal-fired sources polluting the atmosphere with never a second thought. Under this administration fracking expanded exponentially, despite its questioned effects on groundwater and geological disturbances. That administration from 2008 to 2016 oversaw domestic oil production as it soared from 5 million to almost double the number of barrel production daily, fast-tracking to energy independence.

Since then, fracking for shale oil has diminished notably and the United States is back to importing oil from the very sources it meant to be independent from. Back then the administration viewed Canadian crude oil with the distaste of true environmentalists, and stopped the planned construction of TC Energy's Keystone XL pipeline meant to carry 830,000 barrels of crude daily from Alberta to refineries on the U.S. Gulf Coast. Citing the 'dirty' Alberta 'tar sands' environmental impact and an unwillingness to host a modest pipeline at a time when the American geography was criss-crossed by pipelines.

Nine years have passed since President Obama rejected the application for the Keystone XL pipeline. During that time U.S. oil production has fallen dramatically with shale production lost and the U.S. looks about for a secure oil supply. The one that exists right next door is once again rebuffed even though the Alberta oilsands is no longer a source of carbon intensive barrels; that carbon intensity has been reduced by over 20 percent at present, with the average barrel produced in Canada cleaner than that produced in California.

At 170 billion barrels, Canada's oil reserves in the Alberta oilsands represents the third largest in the world; greater than Russia, China and the U.S. combined. Keystone XL was meant to provide secure access to this strategic supply -- to be piped to purpose-built U.S. refining capacity in the Gulf; far and away preferable to carbon-intensive rail transit and a safer alternative supply than oil from Venezuelan tankers. It took one year for U.S. production to decline from13 million barrels a day to 11 million, where it is at the present time.

Oil is power, its energy source is an imperative tool to development and production anywhere. It has traditionally conferred strategic  geopolitical clout for those who control it. At the same time those who control oil production and distribution with few exceptions are represented by national entities unconcerned with human rights,environmental stewardship, transparency or international rule of law. Oil prices are increasingly set by Saudi Arabia, Russia and Iran with all the implications therein, particularly for sought-after U.S. security of supply.

 

 

Rather than sanctimoniously overturning former President Trump's agreement on proceeding with the pipeline as a benefit to both Canada and the United States in an oil-security partnership on his first day in power -- intent on overturning as many of the Republican president's initiatives as the Democratic successor could manage in one fell gulp -- the new president would have done well to open his ears and his mind to arguments in favour of the pipeline.

In his inauguration speech, Mr. Biden promised to chart a new course with America's friends, allies and neighbours, to mend relationships that had been set adrift by his predecessors. If the new president meant what he said, he has taken a peculiar route to achieving it by selecting as the first beneficiary of his more open 'friendliness' and appreciation for a steadfast neighbour in Canada, the first shock of bad faith meted out with a smile.