NEW CANADIAN REGIME TO APPROVE NAFTA AS IS

Canada's government will proclaim the North American Free Trade Agreement (Nafta) into law Jan. 1 without any changes to energy provisions. Approval of Nafta without energy changes was welcomed by Canadian petroleum industry officials, who said it will assure continued free trade in oil and gas. However, Canada's new prime minister apparently left the door open for unilateral action on energy issues within the scope of Nafta provisions. However, Jean Charest, a cabinet minister in the

Dec. 20, 1993

2 min read

Canada's government will proclaim the North American Free Trade Agreement (Nafta) into law Jan. 1 without any changes to energy provisions.

Approval of Nafta without energy changes was welcomed by Canadian petroleum industry officials, who said it will assure continued free trade in oil and gas. However, Canada's new prime minister apparently left the door open for unilateral action on energy issues within the scope of Nafta provisions.

However, Jean Charest, a cabinet minister in the former Conservative government, said the Nafta deal is a sellout of Canadian interests.

Prime Minister Jean Chretien had said during this year's election campaign that his party if elected would negotiate for changes in energy provisions similar to those obtained by Mexico, which obtained exemptions for its state-owned petroleum industry. Nafta requires Canada to share energy resources with the U.S. in the event of shortages. In return, it receives open access to the U.S. market.

UNILATERAL DECLARATION

Chretien said his government will issue a unilateral declaration saying Canada "will interpret and apply Nafta in a way that maximizes energy security for Canadians" in the event of shortages. He also said Canada will keep long term energy security under review and "take any measures it deems necessary" for future security.

Chretien said the unilateral declaration is legally valid, but critics questioned whether it has any force.

U.S. Trade Representative Mickey Kantor said the U.S. is confident Canada will continue to be a reliable energy supplier but that the declaration does not alter Canada's commitments under Nafta.

Clayton Riddell, chairman of the Canadian Association of Petroleum Producers, noted Chretien would protect Canadian security of supply by use of strategic reserves and said the industry would be supportive of that.

"We don't think there is anything in his announcement that's going to stop the market forces from maintaining an open and competitive market," Riddell said.

Prior to the agreement, the Alberta government had told Ottawa that access to the U.S. market, absence of regulatory interference, and security for investors are vital to the Alberta petroleum industry. It said any changes to the Nafta energy provisions would harm Alberta and Canadian interests.